Thomas charged $2,400 on his credit card to buy furniture. The interest rate charged by the credit card company is 24.9%. How much will he pay in interest after one month?

Question

anonymous · Answer

I have seen this question before.


"First off the question is not really clear. How much will he owe after the minimum payment is made? Since you included the minimum payment amount, I will assume that is the question.

Most banks accrue interest on a monthly basis. Since the annual rate is 24.9% and the amount charged was $2400, it is a simple matter of multiplying the balance by the annual rate and then dividing this figure by twelve.

$2,400.00 X 0.249 (24.9%) = $597.60

$597.60 divided by 12 = $49.80

At the end of the month, his balance would be $2,449.80 and after he made the $50.00 minimum payment, his balance would be $2,399.80.

So Thomas will only reduce his balance by 20 cents.

Probably a good reason to pay cash"