3. You owe $1,350.00 on a credit card with a 14.25% APR. You pay $300.00 at the beginning of the month. How much interest do you

Question

2 months ago

3

3. You owe $1,350.00 on a credit card with a 14.25% APR. You pay $300.00 at the beginning of the month. How much interest do you

save by paying at the beginning of the month versus at the end of the month?
$
4. Imagine you put the $300 in a savings account earning 3.0% APR instead of using it to pay down your credit card as in Problem 3. What is the difference between the interest your savings account would earn that month vs. the interest that would accrue on your credit card that month if you didn't use the $300 to pay it down?
$

Mathematics

2 answers:

tester [12.3K] · Answer 1 · 2026-03-07T22:35:30+03:00

1) To determine the monthly interest rate, divide 14.25% by 12, which yields 1.1875%.
Paying at the start of the month:
1350 -300= $1050
Paying at the end of the month:
1350+ (1350*1.1875%)-300= $1,066.03
The savings amount to
1066.03-1050=$16.03 saved.

2) Placing $300 in a savings account at an APR of 3% yields 300*(3%/12) = $0.75 in one month.
Conversely, $300 charged on a credit card at an APR of 14.25% would incur a cost of 300*(14.25%/12) = $3.56 over the month. Thus, if you spent $3.56 on the credit card instead of using the $300 to pay down your debt, you effectively lost $2.81.

Hope this helps!:-)

Zina [12.3K] · Answer 2 · 2026-03-07T22:38:17+03:00

Zina [12.3K]2 months ago

0 0

Response:

Detailed explanation: