Angie has received an offer in the mail to transfer her $5,000 credit card balance to a new provider. The offer is ‘low rate and no fees’. The rate offered is 3.99% p.a. compounded monthly for 6 months with no application fees or transaction fees. However, in the terms and conditions it says:
• after the 6-month introductory period, the interest rate will revert to 19.5% p.a., which is a variable rate
• the transferred balance will be repaid first
• government charges and a late payment fee may apply
• minimum monthly repayments are required to be 3% of the outstanding loan amount or $30, whichever is the greater.
a. What advice can you give Angie?
b. Why might Angie consider switching to the new provider?