Business

Reese Stanley

26 July, 18:42

Upon graduation, both you and your roommate receive your first credit cards with identical features. you use your card extensively to make purchases, always paying your credit card balance in a timely manner so that you incur no interest cost. your roommate pays for everything in cash, reserving the credit card only for an emergency that never happened. after two years, you both look for a new credit card. explain why you are offered a new card at a much lower interest rate than your roommate, despite both of you working in similar jobs for the same income. this scenario illustrates the problem of. when you and your roommate apply for a credit card at graduation time, you likely had credit history, so the credit card company assumes, in the absence of information to the contrary, that you represent default risk. behavior provides the credit card company with new information that allows them to revise that assessment.