Question

Prompt

Why is the annual interest rate more important to a borrower who carries a balance than to a borrower who pays off the balance monthly?

Answer 1

Who is paying is not as important as the interest rate. Either way, a lower rate will benefit the person who has the bill.

Explanation:

Answer 2

Interest to be paid will keep on reducing each month

Explanation:

due to reduction of the principal amount. As a result the net interest output will be higher for a borrower who carries balance for the whole year compared to one who pays offs monthly.