Question

Michelle has four credit cards with the balances and interest rates listed below. Rather than budget to pay each of the credit cards off in 36 months, Michelle would like to pay them off one at a time based on the balance for each credit card. In which order should Michelle pay off her credit cards?
Credit Card
Balance
APR
#1
$4,380
17%
#2
$1,365
19%
#3
$2,480
23%
#4
$5,000
15%
a.
1,2,3,4
b.
4,1,3,2
c.
4,3,1,2
d.
1,3,2,4

Answer 1

Answer:

B) 4,1,3,2

Explanation:

Michele's credit cards have the following balances and APR

Credit Card         Balance       APR

     #1                 $4,380          17%  

     #2                $1,365          19%

     #3                $2,480         23%

     #4                $5,000         15%

If she wants to start paying them off one at a time depending on their balance, she could start by paying the credit card with the highest balance, then continue with the second highest balance and so on. She would pay first her credit card #4, then #1, #3 and finally #2.