Question

A credit card had an Apr of 12.87% all of last year and compounded interest daily. What was the credit card's effective interest rate last year?

Answer 1

13.73%

Step-by-step explanation:

Effective annual rate = (1 + APR / m ) ^m - 1

M = number of compounding = 365

`(1 + (0.1287)/(365) )^(365) - 1`

`(1.000353)^(365) - 1` = 0.1373 = 13.73%