Which of the following practices by a credit card company results in lower interest charges to the cardholder?

A) The card company states interest as a monthly percentage rather than an annual percentage.
B) The card company allows a grace period before interest is accrued.
C) The card company allows cardholders to skip payments on their cards.
D) The card company calculates finance charges from the date of purchase to the date the amount is paid.

Question

Carman Rieke · Accepted Answer

Final Answer : B, Explanation :  Allowing a grace period before interest is accrued means that if the cardholder pays off the balance within this period (usually 21-25 days), they will not be charged any interest. This can result in lower interest charges for the cardholder. The other options can result in higher interest charges. A) Stating the interest as a monthly percentage rather than an annual percentage does not necessarily result in lower interest charges as it is still the same rate of interest. C) Allowing cardholders to skip payments usually results in higher interest charges as interest continues to accrue on the unpaid balance. D) Calculating finance charges from the date of purchase to the date the amount is paid can result in higher interest charges as interest accrues over a longer period of time.

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