Question

Suppose you have a credit card with a balance of $3,295.89 that charges 19.85% APR on unpaid balances. The minimum payment each month is $35. If you make just the minimum payment, how much interest will be added to your account balance?

Answer 1

$19.52

Explanation:

The interest due will be ...

$3295.89 × 0.1985/12 = $54.52

If you just pay $35, then the amount of interest added to your balance will be ...

$54.82 -35.00 = $19.52

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Additional comment

The credit card agreements I've seen recently require a minimum payment in addition to the finance charge. If those are terms on this card, the minimum payment would be $54.82 +35.00 = $89.82. Making this minimum payment would result in no interest being added to the balance.