ECONOMICS
COMPOUND INTEREST
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Ford says Mr. Peterson will pay $3, 841.92 in interest after 18 months.
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Finley says Mr. Peterson will pay $341.92 in interest after 18 months.
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Either A or B
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None of the above
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Detailed explanation-1: -Find the interest rate that you pay on your card-12% APR, for example. Convert that annual rate to a monthly rate by dividing by 12-because there are 12 months in a year-so, in this example, you’d pay 1% per month. Multiply the monthly rate by your outstanding balance.
Detailed explanation-2: -The statement balance shows the total dollar amount you owed on the last day of your credit card’s monthly billing cycle. You can find the statement balance on the monthly statement you receive from your credit card issuer.
Detailed explanation-3: -Percentage + interest + fees Suppose your balance (before interest and fees) is $10, 000 and you’ve accrued $160 in interest and $38 in late fees. If your issuer calculates your minimum as 1% of the balance plus interest and fees, you’d have a minimum payment of $298.
Detailed explanation-4: -The minimum monthly payment is the lowest amount a credit card issuer will accept as payment on a credit card balance to keep a cardholder in good standing each month. A cardholder is not required to pay off a balance every month, but it’s always a good idea to pay a balance in full before it accrues interest.