Reference no: EM132550748

Part 1.

Suppose your friends, Mary and John, received their first credit cards with identical features. Mary uses her card extensively to make purchases, always paying the full balance in a timely manner so that she incurs no interest cost. John pays for everything in cash, reserving the credit card only for an emergency that never happened.

After two years, your friends apply for a new credit card.

Explain why Mary is offered a new card at a much lower interest rate than John, despite of the fact that they have similar jobs and make the same amount of money.

Part 2.

"Mary is offered a much lower interest rate because she is showing the credit card company her credit worthiness. She is showing that she is suitable to receive financial credit at a lower rate. Mary and John having the same income and everything is not sawing how responsible John is with credit. If John has a credit but is not using it, thats like a person without a credit card.

I think when credit cards are giving out people should be taught the ends and outs of have a card. I have learned what I know from trail and error. Before I got my first card (2019) I thought I would just use it because I have it. I have exactly been real responsible with it. Maybe because I am trying to buy a house."