Credit cards allow people to purchase things that they can almost afford. Things are bought with the feeling that they will soon be paid for. However they also fuel the temptation to buy things that perhaps should have been resisted. This is especially true with the type of credit card that allows a consumer to spend freely for 6 months without being hit by interest. If the account can be zeroed out in that time, the card has given consumer an interest free loan. But it is possible that the consumer has spent up to the limit of the card, say $10,000 and must now pay this off at 24% APR. a) What is the monthly interest rate corresponding to 24% APR? divided by 12. b) How much interest is owed after 1 month on the $10,000? multiplied by the monthly interest rate.
Credit cards allow people to purchase things that they can almost afford. Things are bought with the feeling
that they will soon be paid for. However they also fuel the temptation to buy things that perhaps should
have been resisted. This is especially true with the type of credit card that allows a consumer to spend freely
for 6 months without being hit by interest. If the account can be zeroed out in that time, the card has given
consumer an interest free loan. But it is possible that the consumer has spent up to the limit of the card, say
$10,000 and must now pay this off at 24% APR.
a) What is the monthly interest rate corresponding to 24% APR? divided by 12.
b) How much interest is owed after 1 month on the $10,000? multiplied by the monthly interest rate.
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