Here is a letter trying to persuade Mr S, Striver to take out a credit card. It is a real letter, only the address has been changed. I have used a letter from Sainsbury's not because they are any worse than other credit card companies, but they happened to send it to me this week! Read it very carefully, then try to answer the questions.

Does the letter tell you what the interest rate will be? (Write yes or no)

How long do you get 0% interest on debt you've transferred from another card?

Do any fees apply to this?

How much are the fees? [?]

Does the letter make it clear how often these fees have to be paid? (write yes or no)

Assuming Mr S.Triver transfers £1000 of debt from another credit card, how much will the fees be? [?]

How long does the 0% rate apply to purchases?

Say Mr Triver spends £2000 on the card in the first 6 months. Assuming the interest rate he has to pay is 17.95% how much will one months interest be on this debt? (round your answer to the nearest penny-don't forget to divide by 12 as it is for one month, not a year.) £

What do you have to do each month to ensure you keep the special rates? Make payment and stay within limit.

Credit card companies encourage people to take up cards with 0% rates, then when the time runs out they can charge lots of interest on the debt. If you have a credit card it is best to pay the debt each month, then you wont be charged interest.

Here is the smallprint on the letter from Sainsburys.



Read the paragraph titled "Personal Pricing". This is the important paragraph!

If Mr S Triver has already got debts, what interest rate do you think he will be offered? %

What does "variable" mean? It could go or .

Say Mr Triver spends £2000 on the card in the first 6 months. Assuming the interest rate he has to pay is 22.9% how much will one months interest be on this debt? (round your answer to the nearest penny-don't forget to divide by 12 as it is for one month, not a year.) £

If the interest rate went up to 26.9% how much would the monthly interest be? £