Question

Credit card companies charge a compound interest rate of 1.8% a month on a credit card balance. Person owes $650 on a credit card. If they make no purchases, they go more into debt. What describes their increasing monthly balance? Possible answers:

A. 650.00, 661.70, 673.61, 685.74, 698.08..
B. 650.00, 650.18, 650.36, 650.54, 650.72..
C. 650.00, 661.70, 673.40, 685.10, 696.80..
D. 650.00, 767.00, 905.06, 1,067.97, 1,260.21..
E. 650.00, 767.00, 884.00, 1,001.00, 1,118.00..

Answer 1

The increasing monthly balance can be described by option B.

Explanation:

The initial balance is $650.00, and with a compound interest rate of 1.8% per month, the balance increases slightly each month. This means that the balance will gradually grow, but at a decreasing rate over time. Therefore, the balance will be slightly higher each month, as shown in option B: 650.00, 650.18, 650.36, 650.54, 650.72, and so on.