Final answer:
The question is about the calculation of credit card interest owed on an average balance with an 18% annual interest rate. Given the information, $750 at an 18% interest rate amounts to $135 in interest per year. The broader context of American credit card debt reflects significant expenditures on interest payments annually.
Step-by-step explanation:
The student's question concerns calculating the interest owed on a credit card balance. When a credit card has an annual interest rate of 18%, and someone maintains an average balance of $750, the interest can be calculated for a year by multiplying the balance by the interest rate. In this case, it can be calculated as 0.18 (turning 18% into a decimal) times $750, which equals $135 in interest per year. Understanding how credit card interest works is important to effectively managing personal finances. This awareness can help in making better decisions regarding borrowing, paying off debts, and it informs us about the broader credit card borrowing market.
In the context provided, we are given a glimpse into American credit card debt. With the average annual interest rate for credit cards at around 15%, Americans pay significant amounts in interest annually. Additionally, with a sizable portion of consumers carrying unpaid balances, the impact of interest can be substantial over time. If a cardholder pays more than the minimum payment, like the friend who adds an extra $10, they can reduce the balance faster and pay less in interest overall.