Question

practice problem 10
tristan opened a credit card with no annual fee, so he assumes that using the credit card regularly will be absolutely free for the next two years while he finishes grad school. why is his assumption incorrect?
○ unless he pays the whole bill every month, he will pay interest according to his apr.
○ he will automatically pay penalty fees if he uses his credit card for more than 3 consecutive months.
○ if his grace period is any longer than 30 days, he will have to pay fees.
○ he will need to pay a separate student fee because he is still in grad school.

Explanation:

Credit cards with no annual fee still charge interest on unpaid monthly balances based on the APR. Grace periods (typically ~21-25 days, not 90) apply only if the full balance is paid monthly. There is no automatic penalty for 3+ months of use, and grad school status does not mandate a separate student fee for this type of card.

Answer:

A. Unless he pays the whole bill every month, he will pay interest according to his APR.