Question

Our credit card bill has a balance of $625. The minimum payment due is $35, and the annual interest rate is 24%. If you only make the minimum payment, what amount will be on your next statement?

a) $605.60

b) $632.40

c) $638.00

d) $648.00

Answer 1

After making the minimum payment of $35 on a $625 balance with a 24% annual interest rate, the new balance would be $601.80, assuming no additional fees or changes. However, this exact number does not match the proposed answers, indicating a possible discrepancy in calculation or additional factors not considered.

Step-by-step explanation:

If you have a credit card bill of $625 with an annual interest rate of 24%, and you make only the minimum payment of $35, the amount on your next statement can be calculated by first subtracting the payment from the balance and then adding the monthly interest. To calculate the monthly interest, divide the annual interest rate by 12 (months) to get a monthly rate of 2% (24% ÷ 12 = 2%). Applying this to the remaining balance after the minimum payment gives you:

Interest for one month = (625 - 35) × 0.02 = $590 × 0.02 = $11.80

Then, add the monthly interest to the remaining balance to find the new balance:

New Balance = Remaining Balance after Minimum Payment + Interest = ($590 + $11.80) = $601.80

This does not match any of the provided options exactly, so it is likely that there has been some rounding difference in the calculation or other factors such as fees that have not been accounted for in the question.