Question

Which would result in you paying the most interest on a credit that has a $2,000 balance and an 18% APR? Pay 20% of your balance every month Make the minimum payment Pay off the balance every month Using your credit card for every purchase

Answer 1

To pay the most interest on a credit card with a $2,000 balance and an 18% APR, making the minimum payment is the option that would result in paying the highest amount of interest. Therefore correct option is B

Step-by-step explanation:

To determine which option would result in paying the most interest on a credit card with a $2,000 balance and an 18% APR, let's compare the four scenarios:

1. Pay 20% of your balance every month: If you pay 20% of your balance each month, you would make a payment of $400 ($2,000 x 20%) in the first month. However, if you continue to pay 20% each month, your balance will decrease, resulting in lower interest charges over time.
2. Make the minimum payment: The minimum payment is usually a small percentage of your balance (e.g., 3%). For a $2,000 balance, the minimum payment would be $60. If you only make the minimum payment, it would take you around 15 years to pay off the $2,000, and you would end up paying over twice that amount in interest.
3. Pay off the balance every month: If you pay off the balance in full each month, you won't accrue any interest charges.
4. Using your credit card for every purchase: Using your credit card for every purchase without paying off the balance each month will result in accumulating interest on the unpaid balance.

Based on these scenarios, making the minimum payment would result in you paying the most interest on the credit card. So, the answer is making the minimum payment.

QUESTION

Which would result in you paying the most interest on a credit that has a $2,000 balance and an 18% APR?

A) Pay 20% of your balance every month B)Make the minimum payment C) Pay off the balance every month D)Using your credit card for every purchase