Monty currently has a Visa card from his bank with the following terms: 18% on purchases, 24% on cash advances with a 4% cash ad

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1 year ago

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Monty currently has a Visa card from his bank with the following terms: 18% on purchases, 24% on cash advances with a 4% cash ad

vance fee on the amount, and a default or penalty rate of 36%. His current statement shows a balance of $6,000. So far he has only taken one cash advance, withdrawing $1,000 from a casino in Las Vegas a year ago, which he has already paid off. Lately he has been having a hard time paying more than the minimum payment of 4% of his balance. The only assets he owns are a seven-year-old car and a $2,500 certificate of deposit that has a 5% APR. What is the APY on Monty's default or penalty rate

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1 answer:

PilotLPTM [1.2K] · Answer 1 · 2023-07-18T21:46:59+03:00

The annual percentage yield on Monty's default or penalty rate equals to 42.58%.

<h3>What is the meaning of APY?</h3>

APY is an acronym for Annual percentage yield.

The percentage yield referred to the real rate of return that is earned on an investment after taking into account the effect of compounding interest.

Given that the Visa card has an original default or penalty rate of 36%, the annual percentage yield on Monty's default or penalty rate equals to 42.58%.

Read more about annual percentage yield

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