Answer:
Step-by-step explanation:When you sign up for a credit card and make a big purchase without making any payments or buying anything else, your balance will increase over time due to the addition of interest charges. To understand how your balance increases, let's consider an example. Let's say you make a big purchase of $1,000 on your credit card with an interest rate of 15%. The interest is charged annually. Here's how your balance would increase over three time periods: 1. First year: After one year, your balance would increase by the interest charged on the $1,000 purchase. In this case, the interest would be $1,000 multiplied by 15% (or 0.15), which equals $150. So, your new balance after one year would be $1,150. 2. Second year: In the second year, the interest would again be charged on the initial purchase amount of $1,000. This means you would be charged $1,000 multiplied by 15%, which equals $150. Adding this interest to your previous balance of $1,150, your new balance after the second year would be $1,300. 3. Third year: Similarly, in the third year, you would be charged interest on the initial purchase amount of $1,000. This would result in an interest charge of $150. Adding this to your previous balance of $1,300, your new balance after the third year would be $1,450. So, over these three time periods, your balance would increase from $1,000 to $1,150 after the first year, then to $1,300 after the second year, and finally to $1,450 after the third year. It's important to note that this example assumes no payments are made and no additional purchases are made. In reality, making regular payments and avoiding additional charges can help reduce your balance and minimize the impact of interest charges.