Question

K

Find the monthly interest payment in the situation described below. Assume that the monthly interest rate is 1/12 of the annual
interest rate.
You maintain an average balance of $375 on your credit card, which carries a 24% annual interest rate.
The monthly interest payment is

Answer 1

The monthly interest payment is calculated by multiplying the average balance by the monthly interest rate.

To find the monthly interest rate, we need to divide the annual interest rate by 12 (since there are 12 months in a year).

24% annual interest rate / 12 months = 2% monthly interest rate

Now that we have the monthly interest rate, we can calculate the monthly interest payment by multiplying the average balance by the monthly interest rate.

$375 average balance x 2% monthly interest rate = $7.50 monthly interest payment

So the monthly interest payment in this situation is $7.50