Continuing Case: Tarek's Financial Journey

Tarek has been thinking about getting a credit card, but he is skeptical that a credit card will be a useful spending tool for him. Instead, Tarek has always used a debit card. His reasoning is that using a debit card

provides protection from overspending; after all, he can only spend what is in his account.

Instructions

a$.$ Provide Tarek with at least three reasons he should consider adding a credit card as a spending tool rather than relying solely on a debit card.

b$.$ Assuming that Tarek is now convinced that he needs a credit card, provide him with guidance on choosing between cards with different APRs. Specifically, when does choosing a credit card with a low APR

really matter?

c$.$ Tarek has heard that it is quite difficult to get a credit card. He had a friend whose credit score was $550$ and was denied a credit card. This got Tarek scared, so he obtained a free credit report, used a free

online resource to get his FICO credit score, and found out his credit score is $745.$ Based on this information, how difficult will it be for Tarek to obtain a credit card? What other advice do you have for

Tarek if he decides to obtain a credit card?

d$.$ Assume Tarek now has a credit card and he carries a $$2,000$ monthly balance. If the credit card company uses a $4\%$ multiplier to determine the minimum monthly payment and the card has a $19\%$ APR

and $30-$day billing cycle, what will be the minimum monthly payment? How much of the first payment will go toward paying interest?