Question

You have a balance of $15,000 for your tuition on your American Express credit card. If your APR is 21%, you make no further charges, and each month you make only the minimum payment of 3% of your balance, then the formula for the balance after t monthly payments is given by 15,000(0.986975)t. What will the balance be after 10 years?

Answer 1

$3,110.50

Step-by-step explanation:

If the formula for calculating your credit card balance after t monthly payments is $15,000 x (0.986975)∧t, and t = 120 (= 10 years x 12 payments per year);

your credit card balance will = $15,000 x (0.986975)∧120 = $15,000 x 0.20737 = $3,110.50 after 10 years.

It is never a good idea to only pay the minimum monthly payment, since it takes forever to pay your credit card debt.