Interest Rates

These institutions offer credit cards.

Institution A's annual percentage rate is 13.74%.

Institution B's annual percentage rate is 11.99%.

Institution C's annual percentage rate is 17.9%.

Which institution would you choose to have a credit card with?

• Institution A

• Institution B

• Institution C

What is an annual percentage rate (APR)?

• The yearly rate charged for borrowing funds

• The original amount borrowed

• The total amount of the principal and interest over the term of the loan.

• The tax rate charged on loans.

Why might someone prefer a fixed rate loan over a variable/adjustable rate loan?

• The interest rate fluctuates, but always stays below 5%

• The interest rate stays fluctuates, but you can earn money in the long-run.

• The interest rate stays the same for 6 months and continually decreases over the life of the loan.

• The interest rate never changes so there are no surprises in payment changes.

If you are earning interest, then which type of interest would more likely lead to more earnings?

• Simple interest

• Compound interest

Which type of interest would you prefer if you are paying interest?

• simple

• compound

Which type of interest rate is generally considered to be riskier?

• fixed

• variable