Question

question 4
4 pts
ellen, barbara, and paul all charged $1,000 on their credit cards last year. who paid the most in finance charges?
google translate

barbara, who always pays off her credit card balance in full.
ellen, who generally pays off her credit card in full but occasionally will pay the minimum payment.
paul, who only pays the minimum amount each month.

Explanation:

To determine who paid the most in finance charges, we analyze the credit card payment behaviors:

• Barbara pays off the balance in full, so she incurs no finance charges (since finance charges apply to unpaid balances).
• Ellen generally pays in full but occasionally pays the minimum, so she incurs finance charges only occasionally.
• Paul only pays the minimum amount each month. When only the minimum is paid, the remaining balance accrues interest (finance charges) over time, and this balance is typically higher and carried over for more months compared to Ellen’s occasional minimum payments. So Paul’s unpaid balance (and thus finance charges) will be the highest as he never pays the balance in full and always carries over a larger balance by paying only the minimum.

Answer:

C. Paul, who only pays the minimum amount each month.