Question

A bank charges 18.12% interest per year on a credit card account. Jose' closed his account and has a balance of $529.84 that he needs to pay off. How much interest will Jose' pay in the first month of paying off his balance?

Answer 1

$8 monthly interest in the first month

Explanation:

From the mentioned , bank charges interest of 18.12% interest annually, while Jose has balance of $529.84,

One month interest will be.

= 529.84 x 18.12% x 1/12 (one month)

= 529.84 x 0.1812 x 0.083

= 8.00

Thus, he has to pay $8 monthly interest.

Answer 2

Jose will pay $8 as interest in the first month of paying off hi balance.

Explanation:

With $529.84 in his account that he has to pay, there is a 18.12% interest per year. So, the monthly interest rate on the credit card can be calculated by using the general formula :

`Monthly interest rate = Annual interest rate / 12`

Monthly interest rate = 18.12% / 12

Monthly Interest rate = 9.06%

Jose must pay an interest of $8 in the first month. As the account is closed this amount will not be added to the credit card account.