430 Chapter 10 Consumer Mathematics
E. Choosing the Best Deal
- Arturo is looking around for a Visa card, and has narrowed his choices to three different banks. Each offers a different
annual fee and interest rate, as given in the table below:
Card Issuer APR Annual FeeTu rtlepoint Trust 19% $20
Myrtle Mutual 15% $35
Rew Regional 21.99% NoneWhich card will be the least expensive for him if:
a. His balance varies from month to month, but is usually very high?
b. He carries an average balance of $2,000?
c. His balance averages $800?
d. His balance averages $250?
e. He is a convenience user?- Seema applied for a MasterCard from her credit union. Her application was approved, and she was offered the choice
of three different plans:
Plan Interest Rate Annual FeeInterest Super-Saver 8.99% $75
Fee Freedom! 18.99% None
Standard 13.5% $25Which plan should Seema choose if she plans to:
a. Carry a balance averaging around $500?
b. Transfer all of her other credit card balances (totaling $5,000) to this card?
c. Have an average balance of around $1,000?
d. Pay off her balance in full each month?- How large of a balance would Arturo (from Exercise 17) need to carry on average for him to:
a. Prefer Myrtle Mutual over Turtlepoint Trust?
b. Prefer Turtlepoint Trust over Rew Regional?- What sort of average balance would Seema (from Exercise 18) need to carry in order to:
a. Prefer the Interest Super-Saver over Standard?
b. Prefer Standard over Interest Super-Saver?
c. Prefer Fee Freedom! over Standard?- Suppose you are offered a MasterCard from each of four different banks, with fees and interest rates as shown in the
table below. You would be equally happy with any of the four, and are just interested in fi nding the lowest-cost option.
Card Issuer Interest Rate Annual FeeNorthern National 15% $20
Southern Mutual 19% $35
Western Trust 11 ½% $30
EastBancorp 9.99% $75