Exercise 3: Do credit cards have fees?
What does APR stand for?
- Annual purchase rate
- Annual percentage rate
- Approximate payment rotation
- Authorization processing rate
Which fees do all credit cards have?
- Annual fees
- Over-the-limit fees
- Foreign transaction fees.
- Some credit cards have no fees at all.
When do you have to pay a cash advance fee?
- When you move a balance from one card to another
- When you do not make your payments on time
- When you spend more than your limit on a card
- When you withdraw money from an ATM
If a card has a $2,400 balance and a minimum payment of 4%, what would you need to pay to keep your card in good standing? Assume that there are no other fees involved.
- Explanation: 4% of $2,400 = .04 x $2,400 = $96
What would be the approximate one-month interest be for a $5,000 credit card balance with a 12% APR?
Explanation: 12% APR represents a year, or 12 months of interest. 1 month of interest would be approximately 1/12 of that.
12% / 12 = 1%
1% of $5,000 = .01 x $5,000 = $50