Quantitative Reasoning Credit Cards

Math 123 Homework 10 – Sec 10 Quantitative Reasoning Credit Cards

1. Your friend has a credit card with an APR of 49.9%. What would his finance charge be on a \$500 balance for just 1 month? (round to the hundredths place)

Questions 2-3. Your friend has 2 credit cards with balances that he cannot afford to pay off all at once. A \$500 balance on a card with 15.99% APR and a \$400 card with a 25.99% APR. 2. Calculate the monthly finance charges for each credit card. (round to the hundredths place)

3. What advice would you give your friend about paying off the balances on these cards?

Questions 4-10. With a beginning balance of \$1200 and no additional charges during the next three months, you will just pay the minimum payment each month for the next three months. The APR is 24.99% and the minimum payment each month is 3% of the balance. 4. Determine the finance charge, new balance, and minimum payment required for each of the next three months, and the starting balance for month 4 in the table below: (round to the hundredths place) Month Carry Over Balance Finance charge New balance Minimum payment
1 \$1200.00

5. What is the total of the minimum payments? (round to the hundredths place)

6. What is the total of the finance charges? (round to the hundredths place)

7. How much does the starting balance decrease after these three payments? (round to the hundredths place)

8. Your finance charges are what percent of your payments? (enter a percentage rounded to the nearest whole number)

9. Why is making the minimum payment all the time is great for the credit card company, but not so great for the user?

Math 123 Homework 10 – Sec 10 Quantitative Reasoning Credit Cards

10. Why is having a credit card and using it wisely a beneficial to you?

11. Suppose Billy had a zero balance on his credit card but then used the card to charge \$1,900 of his tuition. His annual interest rate is 30%. Complete parts a) through d) below.
a) What percentage will be charged each month?
He will be charged ______% every month. (Type an integer or a decimal.)
b) What will be the interest charge for the first month?
He will be charged \$_______ in interest for the first month. (Round to the nearest cent as needed.)
c) What is his balance after making a \$100 payment?
His balance after the \$100 payment is \$_________. (Round to the nearest cent as needed.)
d) What is the interest charge for the second month?
He will be charged \$________ in interest for the second month. (Round to the nearest cent as needed.)

12. Suppose Evan had a zero balance on his credit card but then used the card to charge \$300 for textbooks and supplies. His annual interest rate is 30%. Use one computation to determine the interest charged for the first month. (Round to the nearest cent as needed.)