Question

Will fan and medal please help! you owe $1568 on a credit card with a limit of 2,200 at an interest rate of 11.3 APR. you pay 300 a month until it is paid off. how may months does it take to pay it off and how much interest did you pay?
I am having trouble with the interest any help?

Answer 1

Assuming you make the first payment at the end of the month.
Let R = 1+0.113/12 = 1.009416667 = 1 + monthly interest
Interest is assumed to be compounded every month.
The amount owing at the end of the first month
= 1568*1.00941667(owing+interest)-300 (payment)
= 1282.77
The amount owing at the end of the second month
= 1282.77*1.00941667(owing+interest)-300 (payment)
= 994.84
Continuing this way, you will get the amount owing decreasing to
704.21
410.844
114.71
-184.21 (after the sixth payment).

Therefore he has paid 1800-184.21=$1615.79
instead of $1568 that he owed initially.

Do you follow how the solution works? @saysabr

Answer 2

so, that is another account of mine, and im not following completely...so it takes 6 months by paying 300 a month and the interest payed was 47.79?

Answer 3

@mathmate

Answer 4

Yes, that's correct. For the last month, he does not pay 300, but 300-184.21=$115.79.
The interest is 1615.79-1568=$47.79 over the six months.
Approximately it is 47.79/1568=3.04% which is the right ball park figure.
(he owes approximately half of 1568 for six-months, so about 1/4 of the annual interest).