The Cost of Credit Card Usage Worksheet Review Ch. 5 of Focus on Personal Financ

Question

The Cost of Credit Card Usage Worksheet Review Ch. 5 of Focus on Personal Finance, your Week 3 Khan Academy Video, and your iGrad Credit Card Module for support in completing this assignment. Calculate the following using the Bankrate cakculator. You may use the Bankrate calculator for the remainder of the questions on this worksheet. 1. it Card Interest Rate Minimum/FixedNumber of Payment Months to Pay in Paid Full Balance Impact of Interest Rates $5,000 Minimum interest+1% of balance) Minimum (interest+ 1% of balance) $5,000 Impact of Payment Amounts $2,000 4 Minimum interest+ 1% of balance Fixed $100 15 In the-Impact of Interest Rates. example, a 5% interest rate difference results in how much extra interest paid when making only a required minimum monthly payment equal to the monthly interest plus 1% of the outstanding balance? 2 fixed payment of $100 per month instead of the required minimum payment equal to the monthly interest plus 1% of the outstanding balance?

Explanation / Answer

1. Using Bankrate calculator, answers are as follows :

2.The Extra interest paid = $2693 - $2095 = $598

3.Total interest saved by making fixed payment of $100 per month = $937 - $315 = $622

No. of Months to pay in full Total Interest paid 69 $2095 62 $2693 66 $937 24 $315

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