Question

determine whether the statement below makes sense or does not make sense and explain your reasoning. i like to keep all my money, so i pay only the minimum required payment on my credit card. choose the correct answer below. a. the statement makes sense because paying only the minimum required payment means that i have more money to spend the next month since i did not give it to the credit card company. b. the statement does not make sense because the balance will accumulate interest as well, meaning more money will have to be paid back. c. the statement does not make sense because the credit card company will not allow paying only the minimum required payment for many months in a row. d. the statement makes sense because as long as i pay the minimum required payment, the credit card company will not charge me any fees, and i will have more money to spend.

Explanation:

When only the minimum payment is made on a credit card, the remaining balance (the amount not paid) will accrue interest. This means that over time, the total amount owed (principal + interest) will increase. So, in the long - run, more money will have to be paid back. Option A is incorrect because although there is more money in the short - term, the long - term cost (due to interest) is higher. Option C is incorrect as credit card companies do allow minimum payments for multiple months (though it's not advisable). Option D is incorrect because credit card companies do charge interest on the remaining balance when only the minimum payment is made.

Answer:

B. The statement does not make sense because the balance will accumulate interest as well, meaning more money will have to be paid back