Many companies offer credit cards with compounding interest. Usually this is called the annual percentage rate, or APR. When the interest is compounded frequently, A) the APR will increase steadily over time. B) balances on the credit card grows faster. C) cash advance limits on the credit card decrease over time. D) the company receives less profit from the credit card balance.

Compounding interest is basically putting interest on interest, so it isn’t pleasant when it happens on a credit card. I would answer with B, because most credit cards today compound interest daily, so compounding frequently can increase your debt quite quickly, especially if you carry a higher balance on your card.

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PiaDeveau PiaDeveau · Answer 2 · 2021-12-11T06:38:34+01:00

Credit card balances are increasing at a quicker rate.

Compounding interest would be when interest is added to interest, which is unpleasant when it occurs on a credit card. Since most credit cards currently compound interest everyday, I'd say B. Compounding interest consistently can quickly raise your debt, particularly if you have a significant balance on your card.

So, Option "B" is the correct answer to the following question.

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