Card Name (APR %),Existing Balance,Credit Limit
MarK2 (8.2%) $1,692.45 $3,000.00
Bee4 (10.5%) $2,138.90 $2,500.00
You have $400.00 each month to payoff these 2 credit cards. You decide to pay only the interest on the lowest interest card and the remaining amount to the other card.
1) How long does it take to pay off the higher interest card?
2) What is the amount of the last payment? Why?
3) What is the balance of the lowest interest card when the higher interest card is paid off? Why?

Question

Card Name (APR %),Existing Balance,Credit Limit
MarK2 (8.2%)	$1,692.45	$3,000.00
Bee4 (10.5%)	$2,138.90	$2,500.00
You have $400.00 each month to payoff these 2 credit cards.  You decide to pay only the interest on the lowest interest card and the remaining amount to the other card.
1)	How long does it take to pay off the higher interest card?
2)	What is the amount of the last payment? Why?
3)	What is the balance of the lowest interest card when the higher interest card is paid off? Why?

anonymous · Answer

4) Rework the problem so that you pay off the lower-interest card first. How much money do you save by paying off the higher-interest card first?