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Credit Card Debt Assignment
Credit Card Debt Assignment
Your credit card statement lists the APR (Annual Percentage Rate) for your balance to be 14.4%. This is the yearly
interest rate the credit card company uses in calculating interest due on your balance. The credit card company
compounds interest monthly. Your monthly interest rate on credit card charges will be:
APR 0.144
i =12 12 0.012
The minimum payment required by your credit card company is $25/month. Assuming that you do not make any new
charges to your account, answer the following questions to help you determine the best plan for paying off this credit
card debt.
1. To begin with, let's check out the plan of only paying the minimum amount due each month. To get a feel for how
this will affect the balance, finish filling in the following table using the minimum monthly payment of $25. Round
each answer to the nearest cent.
225 ) =300
3. How much of the original balance has been paid off at the end of the first year?
(737.18 -B12.2 2
Math 1050 Credit Card Debt Assignment Name Tel
take to pay off the $2000?
4. From looking at the new balances over the first year, how many years do you think it will
so there is no wrong answer. Before moving on, write down your
best estimate.)
(This is a guess
OVe 209eaNS
M .
- In +i)
D $2000.00 and i = 0.012.
6. Use your formula for M to fill in the following table for the given values of P, using =
24
2,000 6,012
I- Cl+O.ol2) -/ 2 -t0.01)-12
177.15 74.96
(b) What is the total amount paid to the credit card company, rounded to the nearest dollar?
A 12
179.15 x 12 =
12,/S Y90)
Math 1050 Credit Card Debt Assignment Name
8. What is the best plan for paying off the $2000? Why?
i
od pay
The est plan fs 6 7S.ao LecavSe
24.75 whjck
2,7 yes VS nd ead P Pying 29
ti 2S so p-ym on
9. What is the worst plan? Why?
Ee ove 22 ye arS
S2S e y mea cUse t
Lshicu is
67 6 . 2S to tal
more +an 50 7 pryoM°at.
afford to make the payments required by the best plan?
10. What should you do if you cannot
50 d | ler g yMeAT
l
i.ts
aluayS es t M e lu ryet payments
LecUse
)ong rn yo end up Pey i n e
wteest,