Abby has the option of using her credit card, which has compound interest of 10%, for a $5,000 expense. She also sees an offer for a personal loan of $5,000, with 10% simple interest. Why might the loan be a better deal?
Answer
A
The personal loan will end up costing only $5,000 in the end, while the credit card will cost more.
B
If Abby opens an additional line of credit with the personal loan, her credit score will improve.
C
With simple interest, the interest will not accumulate if Abby does not pay the loan off quickly.
D
Personal loans do not have payment deadlines the same way that credit cards do.