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A credit card has a balance of $3,400. The APR is 27% and the minimum payment is 3% of the balance. You will pay the minimum balance this month. If you do not use the card again then how much should the balance be next month?

1 Answer

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The minimum payment for this month would be:

minimum payment = 3% of $3,400 = 0.03 x $3,400 = $102

The interest charged on the remaining balance after the minimum payment is made can be calculated as:

interest = APR/12 x remaining balance

where APR is the annual percentage rate and the division by 12 is to convert it to a monthly rate.

So for this month, the interest charged would be:

interest = 0.27/12 x $3,298 = $74.32

where $3,298 is the remaining balance after the minimum payment is made.

Therefore, the balance next month would be:

balance = previous balance - payment + interest

balance = $3,400 - $102 + $74.32 = $3,372.32

So the balance next month should be $3,372.32 if you only make the minimum payment and do not use the card again.

User Andrew Killen
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