Question

Larry has been paying the minimum balance on his three credit cards each month. He has outlined the minimum payments for the next four months. He decides to snowball his debt after Month 1 according to the interest rate instead of paying the minimum payment. Part 1 (2 points): Explain, using complete sentences, how the total monthly payment will change for each month. Part 2 (2 points): Explain, using complete sentences, how the payments for each credit card will change for each month.

Answer 1

Part 1: Larry decides to start paying off the card with the highest interest rate first.

Part 2: larry will focus on paying off the card with the highest interest rate first. And then he will do the minimum payment on the other cards.