Question

You are comparing two credit cards to apply. Vaster Card charges you an APR of 22.4%,...

You are comparing two credit cards to apply. Vaster Card charges you an APR of 22.4%, compounded daily. Misa card charges you an APR of 22.55%, compounded monthly. Assuming 12 months in a year and 365 days in a year, which card should you get?

Question 3 Part C: Provide the effective interest rates for both Vaster Card and Misa

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Answer #1

Vaster card charges 22.4% compounded daily.

Misa card charges 22.55% compounded monthly.

In order to compare the two cards we are required to calculate the effective rate of interest.

Effective interest rate of Vaster card= 25.10% per year

Now, calculating the effective interest rate of Misa card.

Effective interest rate of Misa card = 25.03% per year.

The effective interest rate of Misa card is less than the rate of Vaster card. Therefore, select Misa card.

Please contact if having any query will be obliged to you for your generous support. Your help mean a lot to me, please help. Thank you.

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