Note: All interest rates are to be assumed to be yearly interest rates.
For this assignment you will need the prime interest rate, as posted in the Wall Street Journal®.
Use the Internet to search for the current prime interest rate.
· List the current prime interest rate:_______________
1. You have a credit card that is charging you 9.9% + the current prime rate. What is that interest rate on the credit card today?
2. If this same card were issued 30 years ago, what would your interest rate be? In the event that there were multiple prime interest rates for a year, use the one that is 30 years from the day your class started. Use the Internet to determine what this rate is.
3. In the month of April, your credit card (which is charging you 9.9% + the current prime interest rate) has a balance of $1000. On April 3rd you charge $100, then on April 20th you put 15 gallons of gas on the card. On April 23rd your payment of $400 arrives and is posted to your account. Finally, on April 27th you charge all of your food for the month for your family of 4.
a) What is your average daily balance at the end of the month on this card? Hint: You will need to research and find the cost of gas and food in order to solve this. Use the national average as of four months before the date Assignment is due. For instance, if your Assignment is due November 3rd, 2012, use the July 2012 national average.
b) How much interest will your card charge you this month, assuming interest is charged on the average daily balance?
c) If this card were using the interest rates of 30 years ago, how much interest would your card charge you this month?
5. Search for a consumer research site such as:
Source: Bankrate.com (n. d.). Retrieved from http://www.bankrate.com
Research and find three credit cards offered by three different companies. Write an essay on which credit card is the best and why you think it is the best. In your essay look at things like the interest rate, grace period, annual fees and compare those between the cards, but in the end you must make a decision on which card you like best and why. (Note: Professors are free to pick three cards for you to research if they wish, please check with your teacher for specific requirements on this question).
· Write your essay in this document – do not save it in a separate file.
· You must clearly state your position with well-structured paragraphs using proper grammar, spelling, and sentence structure.
· This is not an “opinion” question – you must offer evidence to support your position, using properly cited sources.
· Your answer must be between ¾-1 page in length.
· You must cite and reference at least one source (book, website, periodical) using APA format.
· Do not use unreliable sources such as Wikipedia, and Yahoo! Answers.