Question

Colin maxed out his credit card at $4,000

. The interest rate is 12.35%

.


Using an online calculator, Colin determines that if he stops using the card and pays $300

per month for the next 15

months, he will pay off his debt. How much interest will Colin have paid when his credit card balance is $0

?

Answer 1

So Colin is required to pay $300 for 15 total months in order to get his credit card balance down to $0.

In order to find this total, we need to take the amount he is going to pay per month ($300) and multiply is by the total number of months that he is going to be paying that amount (15):

$300 * 15 months = $4,500

The total amount of money that he is going to pay after his card balance reaches $0 is $4,500.

However, Colin only maxed out his credit card to $4,000 - the rest of the money is due to interest. So to find this amount, we take the total amount that he paid ($4,500) and subtract it from the total amount he initially maxed out his card with ($4,000):

$4,500 - $4,000 = $500

The amount of interest that Colin has paid when his credit card balance is $0 is $500.

Answer 2

it wants to know the interest payed over 15 months, he payed $300 each month and of that 300, there was 12.35% of it taken out. if you do the math...
300 x (12.35/100) it comes out to 37.05 that means that each month he payed $37.05 to interest when he made his payments, and at this point we can ignore the $300 he pays each month and focus on the interest alone, we know he is going to pay the same amount for 15 months which means he pays $37.05 towards interest 15 times over, with some simple math...
$37.05 x 15 which comes out to $555.75
meaning over the total 15 months he payed $555.75 total in interest
Thus your answer is $555.75

The other person who answered wasnt exactly wrong it's just the fact that if your paying $300 a month you dont pay it a little each day you pay the full $300 at one time each month, so the balance will never actually hit $0 it will blow past it, meaning you can't do the math how he answered it, you have to reverse it and figure it out from the interest first.

Hope This Helps.