you have a $5841 credit card debt, and you plan to pay it off through monthly payments of $71. if you are being charged 14% interest per year, how long will it take you to repay your debt?
To find out how long it will take to repay your credit card debt, you first need to understand how interest works and how it affects your monthly payments.
Step 1: Calculate the interest charged per month
To determine the interest charged per month, divide the annual interest rate by 12 (the number of months in a year). In this case, the annual interest rate is 14%, so the monthly interest rate is 14% / 12 = 1.17%.
Step 2: Calculate the monthly interest charge
To calculate the monthly interest charge, multiply the monthly interest rate by the current balance. Since you start with a $5841 balance, the monthly interest charge is 1.17% * $5841 = $68.37.
Step 3: Calculate the effective monthly payment
To determine the effective amount you are paying off the debt each month, subtract the interest charge from your monthly payment. In this case, your effective monthly payment is $71 - $68.37 = $2.63.
Step 4: Calculate the number of months to repay the debt
Finally, divide the starting balance by the effective monthly payment to find out how many months it will take to repay the debt: $5841 / $2.63 = 2217.55 months.
Given that the calculation reveals a fractional value, it means you cannot pay the debt off within a whole number of months. Therefore, it will take approximately 2218 months to completely repay the $5841 debt.
Note: This calculation assumes no additional charges are made to the credit card during the repayment period and that the monthly payment remains consistent.