If you have a credit card balance of $2500 dollars with an interest rate of 18% and only make the minimum payments equivalent to the interest for the month plus one percent of the balance - what would the total pay off cost be? And how many years would you have to pay off the balance?

Question

anonymous · Answer

@ganeshie8

tkhunny · Answer

18% annual interest rate (usually compounded monthly)
18%/12 = 1.5% of the balance.  Monthly Interest Rate
1.5% + 1.0% = 2.5% of the balance, monthly interest rate including the extra payment.

You need to see how that happened.

Now what?

anonymous · Answer

so 25 dollars a month it would take 100 months to pay it off right?
so 8 years and 4 months..

so you would pay 3750 in interest, so a total of $6250?

tkhunny · Answer

I have no idea.  I didn't check it out.  How did you arrive at those conclusions?

anonymous · Answer

1% of 2500 = 25
so if you pay the minimum amount its $25 per month
but you still have to pay interest
so interest is 1.5% which is $37.5 so it takes a hundred months to pay off the 2500 and the interest would then be 3750 + 2500 = 6250?..