Question

As of today, Joe owns debt on two credit cards: Citi $1,900 and Amex $3,260. He is not charging additional purchases because he wants to get this debt all paid off. Both cards have an APR of 14.4%. First monthly payback will begin one month from now. How long (# of months, keep the decimal) does it take to pay off Citi? if he only makes monthly minimum payments of $29? 0+ decimals

Answer 1

Joe will take approximately 89.23 months to pay off the debt on his Citi credit card with monthly minimum payments of $29.

Step-by-step explanation:

To calculate how long it will take Joe to pay off his debt on the Citi credit card, we can use the formula for calculating the number of months required to pay off a fixed amount of debt with minimum monthly payments. The formula is:

Number of Months = -(log(1 - r*B/P))/log(1 + r)

Where:

• r is the monthly interest rate (APR divided by 12)
• B is the remaining balance on the credit card
• P is the monthly minimum payment

In Joe's case, the monthly interest rate is 14.4% / 12 = 0.012, the remaining balance on the Citi credit card is $1,900, and the monthly minimum payment is $29. Plugging these values into the formula:

Number of Months = -(log(1 - 0.012 * 1900 / 29))/log(1 + 0.012) = 89.23 months

Therefore, it will take Joe approximately 89.23 months to pay off the debt on his Citi credit card.