Another type of personal loan is a credit card. A financial institution allows you to charge a purchase to your account, and you are required to pay the financial institution at a later time. As with other loans, credit cards charge interest. Interest rates can range from 3% - 22%. When you are paying for debt on a credit card, the financial institution will require a minimum balance be paid each month. The higher the interest rate that is charged on the credit card, the larger the minimum payment will be. You can use credit card payoff calculators such as the one in the following link to determine how much to pay each month and how long it will take to pay off a credit card. credit card calculator When using the credit card calculator, be certain that the monthly charges (new spending or borrowing) are set to 0. Part 2 Exercises: Assume you have a balance of $1,800 on a credit card. Use the credit card payoff calculator to answer the following questions. a. If the credit card has an annual interest rate of 13.6% and only the minimum monthly payment of $35 is made, how many months will it take to pay off the credit card? 1. 3 b. What is the total amount that would be spent to pay off the $1,800 if the monthly 2. a. If the credit card has an annual interest rate of 13.6% and a monthly payment of $65 is made, how many months will it take to pay off the credit card? b. What is the total amount that would be spent to pay off the $1,800 if the monthly payment is $65? 3. a. If the credit card has an annual interest rate of 22% and only the minimum monthly payment of $45 is made, how many months will it take to pay off the credit card? b. What is the total amount that would be spent to pay off the $1,800 if the monthly payment is $45? a. If the credit card has an annual interest rate of 22% and a monthly payment of $80 is made, how many months will it take to pay off the credit card? b. What is the total amount that would be spent to pay off the $1,800 if the monthly payment is $80? 5. What are some reasons the interest rates on credit cards vary? 6. What are your opinions on having and using credit cards for your purchases?
Another type of personal loan is a credit card. A financial institution allows you to charge a purchase to your account, and you are required to pay the financial institution at a later time. As with other loans, credit cards charge interest. Interest rates can range from 3% - 22%. When you are paying for debt on a credit card, the financial institution will require a minimum balance be paid each month. The higher the interest rate that is charged on the credit card, the larger the minimum payment will be. You can use credit card payoff calculators such as the one in the following link to determine how much to pay each month and how long it will take to pay off a credit card. credit card calculator When using the credit card calculator, be certain that the monthly charges (new spending or borrowing) are set to 0. Part 2 Exercises: Assume you have a balance of $1,800 on a credit card. Use the credit card payoff calculator to answer the following questions. a. If the credit card has an annual interest rate of 13.6% and only the minimum monthly payment of $35 is made, how many months will it take to pay off the credit card? 1. 3 b. What is the total amount that would be spent to pay off the $1,800 if the monthly 2. a. If the credit card has an annual interest rate of 13.6% and a monthly payment of $65 is made, how many months will it take to pay off the credit card? b. What is the total amount that would be spent to pay off the $1,800 if the monthly payment is $65? 3. a. If the credit card has an annual interest rate of 22% and only the minimum monthly payment of $45 is made, how many months will it take to pay off the credit card? b. What is the total amount that would be spent to pay off the $1,800 if the monthly payment is $45? a. If the credit card has an annual interest rate of 22% and a monthly payment of $80 is made, how many months will it take to pay off the credit card? b. What is the total amount that would be spent to pay off the $1,800 if the monthly payment is $80? 5. What are some reasons the interest rates on credit cards vary? 6. What are your opinions on having and using credit cards for your purchases?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
Transcribed Image Text:Part 2: Credit Cards
Another type of personal loan is a credit card. A financial institution allows you to charge a
purchase to your account, and you are required to pay the financial institution at a later time.
As with other loans, credit cards charge interest. Interest rates can range from 3% - 22%.
When you are paying for debt on a credit card, the financial institution will require a minimum
balance be paid each month. The higher the interest rate that is charged on the credit card, the
larger the minimum payment will be.
You can use credit card payoff calculators such as the one in the following link to determine
how much to pay each month and how long it will take to pay off a credit card.
credit card calculator
When using the credit card calculator, be certain that the monthly charges (new spending or
borrowing) are set to 0.
Part 2 Exercises:
Assume you have
answer the following questions.
balance of $1,800 on a credit card. Use the credit card payoff calculator to
a. If the credit card has an annual interest rate of 13.6% and only the minimum monthly
payment of $35 is made, how many months will it take to pay off the credit card?
1.
3
b. What is the total amount that would be spent to pay off the $1,800 if the monthly
payment is $35?
2.
a. If the credit card has an annual interest rate of 13.6% and a monthly payment of $65
is made, how many months will it take to pay off the credit card?
b. What is the total amount that would be spent to pay off the $1,800 if the monthly
payment is $65?
3.
a. If the credit card has an annual interest rate of 22% and only the minimum monthly
payment of $45 is made, how many months will it take to pay off the credit card?
b. What is the total amount that would be spent to pay off the $1,800 if the monthly
payment is $45?
4.
a. If the credit card has an annual interest rate of 22% and a monthly payment of $80 is
made, how many months will it take to pay off the credit card?
b. What is the total amount that would be spent to pay off the $1,800 if the monthly
payment is $80?
5. What are some reasons the interest rates on credit cards vary?
6. What are your opinions on having and using credit cards for your purchases?
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 4 steps with 6 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Recommended textbooks for you
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education