Secured Unsecured
Credit APR APR
Excellent 4.75% 5.50%
Good 5.00% 5.90%
Average 5.85% 6.75%
Fair 6.40% 7.25%
Poor 7.50% 8.40%
Use the table above for interest rate questions.
How much more interest do your parents have to pay at the end of the first month because their rating is good rather than excellent?
Correct answers:
18. 71
The difference between the APR for Excellent (4.75%) and Good (5.00%) is 0.25%.
So, for every $100 borrowed, the difference in interest paid between Excellent and Good credit is $0.25.
If we assume that they borrowed $1000, then the difference in interest paid in the first month would be $0.25 * 1000 = $25.
Therefore, your parents would have to pay $25 more in interest at the end of the first month because their credit rating is good rather than excellent.