you owe $848.42 on a credit card at a 12.75% apr the minimum payment of $50 how much goes towards the principial if you make the minimum payment at the end of the first month
if you paid the $50 at the beginning of the month to decrease the principal how much interest accrues by the end of the first month?
how much do you save in interest by paying at the beginning of the month
1. If you make the minimum payment of $50 at the end of the first month, the amount that goes towards the principal would be $29.13. The remaining $20.87 goes towards paying off the interest.
2. If you paid the $50 at the beginning of the month to decrease the principal, the interest accrues on the remaining balance of $848.42 - $50 = $798.42. The interest accrued for the first month would be $798.42 * 12.75% / 12 = $8.49.
3. By paying $50 at the beginning of the month to decrease the principal, you save $8.49 in interest by the end of the first month.