Question

You have a $2,100 balance on your 10% credit card. You have lost your job and been unemployed for 6 months. You have been unable to make any payments on your balance. However, you received a tax refund and want to pay off the credit card.

a. How much will you owe on the credit card if you have not made a payment for 6 months? (Round your answers to the nearest cent.)

Interest Principal

1 months

2 months

3 months

4 months

5 months

6 months

Answer 1

Sol:

Principal = $2100

Interest rate = 10% = Monthly = 10%/12 = 0.8333%

Total period = 6 Months

To calculate balance own after the 6 months.

Months	Opening balance	Interest rate	Interest amount	Closing balance
1	$2,100	0.008333	$17.50	$2,117.50
2	$2,117.50	0.008333	$17.65	$2,135.15
3	$2,135.15	0.008333	$17.79	$2,152.94
4	$2,152.94	0.008333	$17.94	$2,170.88
5	$2,170.88	0.008333	$18.09	$2,188.97
6	$2,188.97	0.008333	$18.24	$2,207.21

Interest amount = Closing balance after 6 months - Principal

Interest amount = $2207.21 - $2100 = $107.21

Therefore amount you owe on the credit card if you have not made a payment for 6 months is $2207.21 out of which $2100 is principal and $107.21 is the interest amount.

Working