Sarah has maxed out her credit card and owes $15,000. The annual interest on her

Question

Sarah has maxed out her credit card and owes $15,000. The annual interest on her credit card is 15%.

A. The minimum payment for some credit cards is 3% of what you owe. What is Sarah’s payment?

B. Suppose Sarah continues to pay the amount found in part 1, how long until she has paid off her credit card dept? Assume she doesn’t charge anything else.

C. What is the total amount she spent to cover the $15,000 debt?

D. Suppose Sarah decides to pay $550 per month, how long until she pays off the credit card?

E. How much does she save by paying $550 a month?

F. Suppose Sarah is getting married in 18 months, what should she pay every month to clear her credit card by the time she is married?

Explanation / Answer

Credit amount is $15000

A- Minimum payment for the card is 3%of17250= $450

B-Number of payment will be = 44 payments

C-Total amount she spent is $19526

D- If she pays $550 per month, then number of month she need to make payment 34months or 2.8years

E- She saved = 4526-3459=$1067

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