Question

Caitlin has a credit card with a spending limit of $1500 and an APR (annual percentage rate) of 18%. During the first month, Caitlin charged $375 and paid $250 of that in her billing cycle. Which expression will find the amount of interest Caitlin will be charged after the first month?

Answer 1

Given:
Spending limit: 1500
APR: 18%
Purchases: 375
Payment 250

Divide the APR by 360 days and multiply it by 30 days to get the monthly rate.

18% / 360 = 0.05%
0.05% x 30 = 1.5%

1.5% will be multiplied to the remaining balance in the first month.

375 - 250 = 125
125 x 1.5% = 1.875

1.875 is the interest charged after the first month.