It will take Cody 3 months to save up enough money to purchase a stereo. He has a credit card with a 12% interest rate. Cody's friend Mark says it will cost Cody less money if he saves for 3 months instead of using the credit card. Is Mark correct?

Question

Business

Wilma

12 March, 20:35

It will take Cody 3 months to save up enough money to purchase a stereo. He has a credit card with a 12% interest rate. Cody's friend Mark says it will cost Cody less money if he saves for 3 months instead of using the credit card. Is Mark correct?

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Answers (3)

Know the Answer?

Mohammad Garcia · Answer 1

Mark is correct. If Cody uses the credit card, he will have to pay interest during each month in which he does not pay off the balance of the card. If he saves money, he will not have to pay interest.

Moocher · Answer 2

Mark is correct.

Credit cards charge interest on unpaid balances.

Paying cash has no interest.

Explanation:

Just did it on EDG 2020

this is what it asks

Annalise Hart · Answer 3

Mark is correct.

Explanation:

If Cody saves for three months, he will not incur any other cost apart from the purchase price of the stereo. Cody may even earn some interest on the savings depending on his type of account.

The use of a credit card is incurring a debt. The credit card debt is usually among the highest in the market. It calculates interests monthly. If Coby purchases the credit card, he will pay three months' interest on the credit.

The savings option will cost less money because it eliminates interest payments.