Question

Antonio has a balance of $4273.56 on a credit card with an annual percentage rate of 21.1%. He decides to not make any additional purchases with his card until he has paid off the balance. a) Many credit cards require a minimum monthly payment of 2% of the balance. What is Antonio's minimum payment on the balance of $4273.56? b) Find the amount of interest charged this month

Answer 1

a) To calculate the minimum payment of the balance, you calculate the 2% of $4273.56. You proceed as follow:

(2/100)(4273.56) = 85.47

Hence, the mimum payment of the balance is $85.47

b) You calculate the amount of interest charged this month as follow:

convert the annual percentage rate to decimal form:

21.1/100 = 0.211

divide the previous result by 12 to get the monthly interest rate:

0.2111/12 = 0.0175

multiply the previoues result by the balance:

0.0175 x 4273.56 = 75.143 ≈ 75.14

convert the monthly rate to a percentage:

0.0175 x 100 = 1.75%

Hence, the amount of interest was $75.14, which corresponds to a 1.75%