Option (b) is correct.
APR will increase in case of missing a credit card payment.
Further Explanation:
Annual Percentage Rate (APR): The annual percentage rate is the rate of the fee charged on the credit card. It remains the same even in the case of the failure in the credit card payment. The credit card that has the lowest APR should be preferred.
Increment in Annual Percentage Rate (APR):
APR will increase with the increase in the credit card expenses or charges. The failure in the credit card payment will result in the late fee charges. The late fee will increase the annual percentage rate (APR).
Thus, failure in the credit card payment will lead to an increase in the Annual Percentage Rate.
Justification for the correct and incorrect option:
a.
Paying the minimum: This is an incorrect option.
The monthly minimum payment will not result in any additional charges for the credit card. Therefore, it will not increase the APR.
b.
Missing a credit card payment: This is the correct option.
The APR will increase because missing a payment will increase the late fee charges on the credit card.
c.
Paying off the full balance: This is an incorrect option.
The credit card company does not charge when the cardholder pays all the balance. There will be no increment in the APR.
d.
Cashing in on rewards point: This is an incorrect option.
Use of the reward points does not result in the increase in APR. The reward points are earned by the cardholder, so he has the right to use them without any charge.
Learn more:
1. Learn more about the credit card utilization
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2. Learn more about maintaining the high credit score
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3. Learn more about various approaches to increase the credit score
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Answer details:
Grade: High School
Subject: Business Studies
Chapter: Money & Banking
Keywords: Annual percentage rate, bank. Charges, fee, credit card fee, which, the following, can increase, your, credit cards, APR, paying the minimum, missing, a credit card payment, paying off, the full balance, cashing, in on, rewards points.
