Question

Marcia has two credit cards and would like to consolidate the two balances into one balance on the card with us

rate. The table below shows the information about the two credit cards Marcia currently uses.
T
Amount
APR
Monthly Payment
Card A
$1,879.58
14%
$43.73
Card B
$861.00
10%
$18.29
After 5 years, how much will Marcia have saved in interest by consolidating the two balances?
a $1,526.40
b. $2,422.80
C. $105.00
d. $227.40
Please select the best answer from the choices provided.
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Answer 1

C has to be right am I wrong

Answer 2

$2422.80 ( B ) is the best answer

Explanation:

For card A

The monthly interest = $43.73

APR ( annual interest ) = 14%

consolidated balance on card = $1879.58 + $861 (balance on card B) = $2740.58

The total interest paid on using card A will be = APR in 5 years + monthly interest in five years :

APR in 5 years = 14% of $2740.58 * 5 = $1918.41

monthly interest in 5 years = $43.73 * 12 * 5 = $2623.8

hence total interest paid on using card A as one balance card = $1918.41 + $2623.8 = $4542.21

For card B

The monthly interest = $18.29

APR = 10%

consolidated Balance on card ( including balance from card A ) = $2740.58

total interest paid = APR in 5 years + monthly payment for 5 years

APR in 5 years = 10% of $2740.58 * 5 = $1370.29

monthly interest in 5 years = $18.29 * 12 * 5 = $1097.4

total interest paid using card B in 5 years = $1370.29 + $1097.4 = $2467.69

the difference between the interest paid on using each card is the amount saved by Marcia by consolidating the two balances into a card that has a lower interest which is $2074.52