Question

the annual interest rate on a credit card is 14.99% . If the minimum payment of 40$ is made each month, how many months will it take to pay off an unpaid balance of $889.98? Assume that no new purchases are made with the credit card.

Answer 1

Let's try and figure it out yearly:

So for the first year the deposits would amount to 40 * 12 = $480

Now since the interest rate is applied yearly we will assume that the interest rate will be applicable to the amount that is left after the first year of deposits

So that would be 889.98 - 480 = 409.98

409.98 * 14.99 % = 61.45

The new amount owed for the second year would be 409.98 + 61.45 = 471.43

So by the end of the second year the debt would of been wiped clean with $8.57 to spare.

So the answer would be 24 months

Explanation: