Question

The balance on Taylor's credit card is $2000. It has an interest rate of 12.5%. She wants to compare the difference between paying $75 and $100 of the monthly balance. How much does she save in interest and fees if she pays $100 instead of $75? Round to the nearest dollar. Enter your answer as a total in dollars, such as $134.

Answer 1

Answer: kindly check Explanation

Step-by-step explanation:

The balance on card = $2000

Interest rate = 12.5%

Therefore, monthly rate = 12.5% / 12 = 0.0104167

Paying $75 of monthly balance :

Interest amount on 2000 = 0.0104167 × 2000 = $20.83

Therefore,

Principal amount payed = 75 - 20.83 = 54.17

Balance = ($2000 + $20.83) - $75 = 1945.83

Interest on balance = 0.0104167 × 1945.83 = $20.2691

Paying $100 of monthly balance :

Interest amount on 2000 = 0.0104167 × 2000 = $20.83

Therefore,

Repayment = 100 - 20. 83 = $79.17

Balance = ($2000 + $20.83) - $100 = 1920.83

Interest on balance = 0.0104167 × 1920.83 = $20.0087

Interest saved by paying $100 instead of $75

$20.27 - $20.00 = $0.27 = 27 cent