Question

You maxed out a credit card to its limit of $15,000 and plan on paying off this $15,000 balance by making minimum payments of $600 (no other charges will be made with this card as you plan on destroying it once the balance is paid off).  On the 8^th day of each billing cycle, an automatic payment of $600 will be made to the credit card company which processes and records it on the same day as the payment.  At the end of each billing cycle the finance charge is added to the account balance to create the beginning balance of the following billing cycle. The rate is 20.6%. Assuming that the average daily balance method is used and that the billing cycle is 30 days in length, determine how long it will take for the credit card to be completely paid off.  

Answer 1

It will take take 33 months for the credit card to be paid off completely. Please refer detailed workings below -

Month	Balance from 1st to 8th (A) = E	Automatic Monthly Payment (B)	Balance from 9th to 30th (C ) = A - B	Balance at monthend using avg daily balance (D) = (A*8 + C * 22)/30	Monthly Charge (E) = D * (20.6%/12)	Closing Balance (F) = C + E
1	15,000	600	14,400	14,560	250	14,650
2	14,650	600	14,050	14,210	244	14,294
3	14,294	600	13,694	13,854	238	13,932
4	13,932	600	13,332	13,492	232	13,563
5	13,563	600	12,963	13,123	225	13,189
6	13,189	600	12,589	12,749	219	12,807
7	12,807	600	12,207	12,367	212	12,420
8	12,420	600	11,820	11,980	206	12,025
9	12,025	600	11,425	11,585	199	11,624
10	11,624	600	11,024	11,184	192	11,216
11	11,216	600	10,616	10,776	185	10,801
12	10,801	600	10,201	10,361	178	10,379
13	10,379	600	9,779	9,939	171	9,950
14	9,950	600	9,350	9,510	163	9,513
15	9,513	600	8,913	9,073	156	9,069
16	9,069	600	8,469	8,629	148	8,617
17	8,617	600	8,017	8,177	140	8,157
18	8,157	600	7,557	7,717	132	7,690
19	7,690	600	7,090	7,250	124	7,214
20	7,214	600	6,614	6,774	116	6,731
21	6,731	600	6,131	6,291	108	6,238
22	6,238	600	5,638	5,798	100	5,738
23	5,738	600	5,138	5,298	91	5,229
24	5,229	600	4,629	4,789	82	4,711
25	4,711	600	4,111	4,271	73	4,185
26	4,185	600	3,585	jeff jeffy Next > < Previous Related Solutions Suppose that you “max out” a credit card to its limit of $14,000 and plan on... Suppose that you “max out” a credit card to its limit of $14,000 and plan on paying off this $14,000 balance by making minimum payments of $500 (no other charges will be made with this card as you plan on destroying it once the balance is paid off). On the 8th day of each billing cycle, an automatic payment of $500 will be made to the credit card company which processes and records it on the same day as the... PAYING OFF CREDIT CARDS Simon recently received a credit card with an 15% nominal interest rate.... PAYING OFF CREDIT CARDS Simon recently received a credit card with an 15% nominal interest rate. With the card, he purchased an Apple iPhone 5 for $330. The minimum payment on the card is only $10 per month. If Simon makes the minimum monthly payment and makes no other charges, how many months will it be before he pays off the card? Do not round intermediate calculations. Round your answer to the nearest month.   month(s) If Simon makes monthly payments... PAYING OFF CREDIT CARDS Simon recently received a credit card with an 17% nominal interest rate.... PAYING OFF CREDIT CARDS Simon recently received a credit card with an 17% nominal interest rate. With the card, he purchased an Apple iPhone 5 for $500. The minimum payment on the card is only $10 per month. If Simon makes the minimum monthly payment and makes no other charges, how many months will it be before he pays off the card? Do not round intermediate calculations. Round your answer to the nearest month. ? month(s) If Simon makes monthly... A6-5. Suppose you always use your credit card for purchases. Your credit card limit must then... A6-5. Suppose you always use your credit card for purchases. Your credit card limit must then be thought of as part of your money holdings. A6-6. In the long run, an economy that is open to capital flows can have investment greater than national saving. A6-7. A central bank that targets inflation would conduct an expansionary monetary policy when faced with a recessionary gap. A6-8. If the policy response discussed in A6-7 is mistimed, it risks becoming pro-cyclical rather than... If you take the maximum length of time to pay off a credit card, at a... If you take the maximum length of time to pay off a credit card, at a rate of 18.5%, how much interest will you pay in interest on a debt of $2,000?. Based your calculations on a minimum payment of 1/36 or $20, whichever is greater. Credit Card Debt – How long will it take me to pay off my credit card... Credit Card Debt – How long will it take me to pay off my credit card balance of $3,750? The credit card company is charging 10% interest. I can afford to pay $150/month, but would prefer to pay $100/month because I want to continue my cable service. Please show me the answer to both scenarios. You just bought a TV for $600 on credit card. You plan to pay back of $50 a month for this credit card debt. You just bought a TV for $600 on credit card. You plan to pay back of $50 a month for this credit card debt. The credit card charges you 12% of interest rate on the monthly basis. So how long does it take to pay back your credit card debt? A. 11.78 month B. 11.43 month C. 12.91 month D. 12.85 month You are paying an effective annual rate of 18.75 percent on your credit card. The interest... You are paying an effective annual rate of 18.75 percent on your credit card. The interest is compounded monthly. What is the annual percentage rate on this account? APR= . You have a $28,000 balance on your credit card. You plan to make monthly payments... . You have a $28,000 balance on your credit card. You plan to make monthly payments of $550 until the balance is paid off. The interest rate on your credit card is 19.5% p.a., compounded monthly. A letter in the mail informs you that you are approved for a new credit card and balance transfers are subject to a 8.5% p.a., compounded monthly. How many months sooner will you pay off your bill? Assume that you have a $22,500 balance on your credit card. You plan to make monthly... Assume that you have a $22,500 balance on your credit card. You plan to make monthly payments of $450 until the balance is paid off. The interest rate on your credit card is 17.5% p.a., compounded monthly. A letter in the mail informs you that you are approved for a new credit card and balance transfers are subject to a 9.5% p.a., compounded monthly. How many months sooner will you pay off your bill? ADVERTISEMENT Subjects Accounting Advanced Math Anatomy and Physiology Biology Chemistry Civil Engineering Computer Science Economics Electrical Engineering Finance History Math Mechanical Engineering Operations Management Physics Psychology Statistics and Probability Nursing Other ADVERTISEMENT Latest Questions Describe a time when someone did not really listen to or understand a point you were... Enumerations Create an advanced enumeration to represent months (JANUARY – DECEMBER) called enuMonths Add internal properties... What is the minimum size of the automorphism group of a simple directed graph having more... The birthday paradox says that the probability (chance) that two people in a room will have... #include <iostream> #include "lib.hpp" using namespace std; int main() {    // declare the bool bool... Why do we compare means instead of individual scores? for comparing average SAT test scores across... NPV Your division is considering two projects with the following cash flows (in millions):    0... ADVERTISEMENT About @ 2020 WizEdu