a) You currently owe $25,000 on a credit card with a 16% interest rate and a minimum payment of $25 or 1% of your balance. b) How soon will you pay off this debt if you make the minimum payment each month? c) How much total interest will you pay using that method? d) Calculate how soon you would pay off this debt if you paid $250 per monthly payment.
Finding the time necessary until you pay off a loan is simple if you make equal payments each month. However, when paying off credit cards many individuals only make the minimum monthly payment, which is generally 1% to 2% of the balance or $25 whichever is greater. Locate the credit card calculator at fincalc website and work out this exercise:
a) You currently owe $25,000 on a credit card with a 16% interest rate and a minimum payment of $25 or 1% of your balance.
b) How soon will you pay off this debt if you make the minimum payment each month?
c) How much total interest will you pay using that method?
d) Calculate how soon you would pay off this debt if you paid $250 per monthly payment.
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