Final answer:
By reducing your credit card debt by 13%, your balance decreases from $1950 to $1696.50, which can positively impact your credit score and save you money on interest.
Step-by-step explanation:
If your credit card balance is $1950 and you reduce your debt by 13%:
you're looking at a decrease of $253.50 ($1950 x 0.13). So, your new credit card balance would be $1696.50 ($1950 - $253.50).
The act of reducing your credit card balance not only helps improve your credit utilization ratio, which is a key component of your credit score, but it also saves you money on interest. Considering the average annual interest rate for credit card borrowing is around 15%, paying off a part of your balance can make a noticeable difference in the interest accrued over time. Therefore, the action taken to shrink the debt is financially prudent.
To calculate the new credit card balance after shrinking the debt by 13%, you need to multiply the current balance by 0.87 (1 - 0.13). So, the new balance would be $1950 * 0.87 = $1696.50.