Question

. Which situation is best? (1 point)having $3,280.00 in a savings account earning a 4.25% APR and $1,320.00 due on a credit card with a 13.5% APR
having $2,013.85 on a credit card with a 9.85% APR
having $524.85 on a credit card with a 8.4% APR and $790.00 in a savings account at a 4.35% APR
having $1,040.00 on a credit card with a 4.9% APR,

Answer 1

Answer:

The best situation is #1, having $3,280.00 in savings account earning a 4.25% APR and $1,320.00 due on a credit card with a 13.5% APR. I just took the test, and this was the correct answer.

Explanation:

Interest Accrued: ($3,280.00)(0.0425)(1/12) = 11.62

Interest Accrued: ($1,320.00)(0.135)(1/12) = 14.85

Take in consideration for number #1 that there are plenty in savings with low interest, enough for you to pay off the credit card and still have money left.

Answer 2

The best situation is having $524.85 on a credit card with a 8.4% APR and $790.00 in a savings account at a 4.35% APR because in one year, the income generated by the savings will be 790*4.35%=34,365$ and the cost to be paid for the credit card is 44.087$ hence after deducting the credit card costs from savings earnings we are left with 9.722$ loss which is the least loss comparing to other situations.