Question

You took a $700 cash advance by using checks linked to your credit card account. The bank charges you a 1% cash advance fee on the amount borrowed with no grace period on cash advances. How much money is required to pay off the balance in full after one month at 20% APR?

Answer 1

To calculate the total amount required to pay off the balance in full after one month, we need to consider the cash advance fee, the borrowed amount, and the interest charges.

First, let's calculate the cash advance fee:

Cash advance fee = 1% of $700 = 0.01 * $700 = $7

Next, let's calculate the borrowed amount:

Borrowed amount = $700

Now, let's calculate the interest charges for one month:

Monthly interest rate = (Annual interest rate / 12) = (20% / 12) = 0.20 / 12 = 0.0167

Interest charges for one month = Monthly interest rate * Borrowed amount = 0.0167 * $700 = $11.69

Finally, let's calculate the total amount required to pay off the balance in full after one month:

Total amount = Borrowed amount + Cash advance fee + Interest charges

Total amount = $700 + $7 + $11.69 = $718.69

Therefore, you would need $718.69 to pay off the balance in full after one month at a 20% APR, considering the cash advance fee and no grace period on cash advances