you owe $848.42 on a credit card at a 12.75% apr the minimum payment of $50
how much do you save in interest by paying at the beginning of the month
To calculate the amount of interest saved by paying at the beginning of the month on a credit card balance, we need to compare two scenarios:
Scenario 1: Making the minimum payment of $50 at the end of the month
Scenario 2: Paying the full balance of $848.42 at the beginning of the month
Scenario 1:
For the first scenario, interest will be calculated on the remaining balance of $848.42 after the $50 minimum payment is made. The monthly interest rate is 12.75% / 12 = 1.0625%.
Interest for the first month = $848.42 * 1.0625% = $9.00
New balance after payment and interest = $848.42 - $50 + $9 = $807.42
Scenario 2:
For the second scenario, the full balance is paid at the beginning of the month, so no interest will be accrued.
Interest saved = Interest in Scenario 1 - Interest in Scenario 2
Interest saved = $9.00 - $0.00 = $9.00
Therefore, by paying the full balance at the beginning of the month instead of just the minimum payment, you would save $9.00 in interest.