Question

You have an outstanding credit card balance if $4,000. You decide to stop making new charges and pay $350 each month until the balance is paid. If your annual interest rate is 18%, how many months will it take you to pay off your balance

Answer 1

12 months of paying $350 and a last payment (13th) of $221.32

Step-by-step explanation:

we prepare a payment schedule:

• principal = $4,000
• APR = 18%, monthly 1.5%
• monthly payment = $350
• n = ?

month beginning monthly principal interest ending

balance payment paid paid balance

1 4,000 350 290 60 3,710

2 3,710 350 294.35 55.65 3,415.65

3 3,415.65 350 298.77 51.23 3,116.88

4 3,116.88 350 303.25 46.75 2,813.64

5 2,813.64 350 307.80 42.20 2,505.84

6 2,505.84 350 312.41 37.59 2,193.43

7 2,193.43 350 317.10 32.90 1,876.33

8 1,876.33 350 321.86 28.14 1,554.48

9 1,554.48 350 326.68 23.32 1,227.79

10 1,227.79 350 331.58 18.42 896.21

11 896.21 350 336.56 13.44 559.65

12 559.65 350 341.61 8.39 218.05

13 218.05 221.32 218.05 3.27 0