Practice Quiz

LSAT

Category - Logical Reasoning

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Analyst: “Credit card companies often offer new customers great incentives, such as 0% interest or large amounts of cash back. This is not a wise practice, however, as new customers are the most likely to default on their bills, and the majority of a credit card company’s revenue comes from keeping long term customers, who do not benefit from the new customer offers.”

Which one of the following, if true, most strengthens the analyst’s argument?
  1. Most credit card companies do not offer new member bonuses.
  2. A credit card company cannot offer 0% financing to everyone or it could not make a profit.
  3. Most people remain loyal to their credit card companies regardless of the incentives offered.
  4. Some credit card companies obtain many new members from these special offers.
  5. New customers who sign up during these special periods have a bankruptcy rate double that of those who sign up without special incentives.
Explanation
Answer: E - The analyst's argument is strengthened if new customers who sign up during these special periods have a bankruptcy rate double that of those who sign up without special incentives. If the customers recruited due to the special incentives are not desirable customers, then the passage is correct in stating that attracting new customers through incentives is not a wise practice.
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