Question
Which statement is correct about Annual Percentage Rate (APR)? It is better for the borrower if the rate is higher. It is the interest rate you pay on balances you carry over from month to month. It stands for Amortized Percentage Rate.
Ask by Carrillo Rodriguez. in the United States
Feb 25,2025
Upstudy AI Solution
Tutor-Verified Answer
Answer
It is the interest rate you pay on balances you carry over from month to month.
Solution
The correct statement is: "It is the interest rate you pay on balances you carry over from month to month."
Explanation:
• A higher APR means you end up paying more in interest charges, so it's not better for the borrower.
• APR does not stand for "Amortized Percentage Rate."
• For products like credit cards, the APR is the rate used to calculate the interest on any unpaid balance from month to month.
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Simplify this solution Extra Insights
The correct statement is that it is the interest rate you pay on balances you carry over from month to month. APR represents the yearly cost of borrowing, including interest and fees, and is a crucial factor for borrowers to understand when taking out loans or using credit cards. It's a way to compare different borrowing options effectively! Keep in mind that a higher APR means more interest to pay, which could lead to more debt over time if balances aren’t managed well. Thus, it’s essential to shop around and understand the terms fully before committing to any loan or credit agreement. Keeping an eye on APR can save you a lot of money in the long run!
