Suppose you have a $1,000 charge on a credit card charging 1% monthly interest using the adjusted balance method. The minimum payment due in May is $50. How much will you save in interest charges in June by paying $100 instead?
Steps please.
You would save the interest on the extra $50 you paid above the minimum. That is $5
You should pay off the entire balance, if you can, and pay no interest at all.
Please just don't dump your homework here en masse. Show your work.
Thanks for your help.You people need to learn how to talk to people.I was recently burned out of my house,and all of my books and everything was loss in the fire, so I do not have my book for a guide.If you feel like that do not respond to me,thats why I have asked for steps so I can figure this stuff out,but thanks again.
Drwls your such a knob knocker LOL
To calculate how much you will save in interest charges in June by paying $100 instead of the minimum payment of $50 in May, you need to follow these steps:
Step 1: Understand the Adjusted Balance Method
The adjusted balance method is a common way credit card companies calculate interest charges. It involves subtracting payments and credits made during the billing cycle from the beginning balance.
Step 2: Calculate the Beginning Balance in May
To calculate the beginning balance in May, subtract the minimum payment due from the $1,000 charge:
Beginning Balance = $1,000 - $50 = $950
Step 3: Calculate the Interest Charge for May
To find the interest charge for May, multiply the beginning balance by the monthly interest rate (1% or 0.01):
Interest Charge for May = $950 * 0.01 = $9.50
Step 4: Calculate the Ending Balance in May
To calculate the ending balance in May, add the interest charge to the beginning balance:
Ending Balance in May = Beginning Balance + Interest Charge for May = $950 + $9.50 = $959.50
Step 5: Calculate the Beginning Balance in June
The beginning balance in June is the same as the ending balance in May:
Beginning Balance in June = $959.50
Step 6: Calculate the Interest Charge for June
To calculate the interest charge for June, multiply the beginning balance by the monthly interest rate:
Interest Charge for June = $959.50 * 0.01 = $9.59
Step 7: Calculate the Interest Saved by Paying $100 in May
To calculate the interest saved in June by paying $100 instead of the minimum payment of $50 in May, subtract the interest charge for June when paying $100 from the interest charge for June when paying $50:
Interest Saved = Interest Charge for June (minimum payment of $50) - Interest Charge for June (payment of $100)
Interest Saved = $9.59 (minimum payment of $50) - $9.59 (payment of $100) = $0
According to the calculations, by paying $100 instead of the minimum payment of $50 in May, you would not save any interest charges in June.