Now, suppose you carry a balance of $12,000 on a credit card that has a rate of 18% APR.

1.If you paid the APR, how much interest would you pay in one year?$1106

2.What is the APY on this card?

3.How much more interest will you pay in one year, using the APY?

4.Lenders typically advertise the APR for a credit card or loan. Why do they do this?

5.Why is it important to consider APY, especially if you have borrowed a large sum of money or if you have a higher interest rate?