Question

You have a credit card with an APR of 19%. The card requires a minimum monthly payment of 7% of the balance. You have a balance of $13,800. You stop charging and make only minimum monthly payments. What will the balance be after 6 years

Answer 1

To calculate the balance after 6 years, you need to find the monthly interest rate and calculate the total interest paid over 6 years. Starting with a balance of $13,800 and making minimum monthly payments of 7%, the balance after 6 years will be approximately $5,085.35

Step-by-step explanation:

To calculate the balance after 6 years, we need to find the monthly interest rate and then calculate the total interest paid over 6 years. The monthly interest rate is calculated by dividing the APR by 12. In this case, 19% divided by 12 is approximately 0.0158. The monthly minimum payment is 7% of the balance, so each month you will pay 0.07 times the balance.

Starting with a balance of $13,800, you will pay 7% * $13,800 = $966 each month. After paying the minimum payment, the remaining balance is subject to interest. The monthly interest is calculated by multiplying the remaining balance by the monthly interest rate. Subtracting the monthly payment and adding the interest, we can calculate the balance for each month over 6 years. After 6 years, the balance will be approximately $5,085.35.