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    2. (Annualizing a monthly rate) You credit card statement says that you will be charged 1.05% interest a month on unpaid balances. What is the Effective Annual Rate (EAR) being charged?

    0  Views: 2021 Answers: 2 Posted: 14 years ago

    2 Answers

    At first glance, it looks like about 12.60% per cent per year, annualized.  However, it could be a little tricky here.  If they charge 1.05% compounded monthly, the actual EAR could be a lot higher.  That would make my ear stand up.  Read the fine print.  These credit card companies are very predatorial!


     


    I say "predatorial" because I didn't want to call them assholes.


     


     

    EAR is 13.35%



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