Question

read the information about two competing credit cards.

	credit card 1	credit card 2
annual fee	none	no annual fee in the first year, then $30 each year thereafter

credit card 1 would be the better option if the borrower

• had major expenses in the first year.
• spent a lot of money in the second year.
• used the card regularly in the long term.
• carried a large balance in the long term.

Explanation:

• For "had major expenses in the first year": Credit Card 1 has 0% introductory rate in the first year, so no interest on major expenses then. Credit Card 2 has 12.1% interest immediately. So this makes Credit Card 1 better.
• For "spent a lot of money in the second year": Credit Card 1 has 13.8% interest, Credit Card 2 has 12.1%. Higher interest on Card 1, so worse option.
• For "used the card regularly in the long term": Card 1 has higher interest (13.8% vs 12.1% on Card 2) and no annual fee, but long - term interest would be a bigger cost. Card 2's lower interest would be better long - term.
• For "carried a large balance in the long term": Card 1 has higher interest (13.8% vs 12.1% on Card 2), so carrying a large balance long - term would mean more interest on Card 1, making it worse.

Answer:

A. had major expenses in the first year