Trisha uses her credit card to pay for new tires that ended up totaling $527.89. She can pay off up to $200 a month. The card has an annual rate of 22.5%. How much will she pay in interest?
22.5% / 12 = 0.01875 interest per month
1st month
527.89 x 0.01875 = $9.90 interest
527.89 + 9.90 = $537.79 balance
537.79 - 200 = $337.79 balance
2nd month
337.79 x 0.01875 = 6.33 interest
337.79 + 6.33 = $344.12 balance
344.12 - 200 = $144.12 balance
3rd month
144.12 x 0.01875 = $2.70 interest
144.12 + 2.70 = $146.82 balance
146.82 - 146.82 = 0 balance
9.90 + 6.33 + 2.70 = $18.93 interest
To calculate the interest that Trisha will pay on her credit card, you can follow these steps:
1. Convert the annual interest rate of 22.5% to a monthly interest rate by dividing it by 12.
- 22.5% / 12 = 0.01875 (interest per month)
2. Calculate the interest for each month by multiplying the outstanding balance by the monthly interest rate.
- Month 1: $527.89 x 0.01875 = $9.90 interest
- Month 2: $337.79 x 0.01875 = $6.33 interest
- Month 3: $144.12 x 0.01875 = $2.70 interest
3. Add up all the interest amounts to find the total interest paid.
- $9.90 + $6.33 + $2.70 = $18.93
Therefore, Trisha will pay a total of $18.93 in interest on her credit card.