Question

You have $1,998.00 on a credit card with a 14.5% APR. You miss your minimum payment the first month and there is a late fee of $37.00. How much is your balance at the beginning of the second month?

Answer 1

The answer is:

$2,059.14

Answer 2

There are 2 parts to this question. 1. One would be to calculate the interest based on your balance and 2. then to add the late fee. Use the formula i = prt to calculate your simple interest. i represents the interest you will pay, p stands for the principal (balance on your credit card), and t stands for the period of time (related to a period of a year/annual percentage rate). The $1998 balance times 0.145 times 1/12 gives the interest amount of $24.14. So, $1998 + $24.14 + $37 = $2059.14 balance.