Question

You make a purchase of $600 on a new credit card with a yearly interest rate of 12%. You make a large payment your first month of $200. What is the credit card's balance before you make the payment? (1 point)
472
606
672
406

Answer 1

To find the credit card's balance before making the payment, we need to determine how the interest is applied in your first month after the purchase.

1. **Initial purchase**: $600
2. **Yearly interest rate**: 12%

The monthly interest rate can be calculated as:

\[
\text{Monthly Interest Rate} = \frac{\text{Yearly Interest Rate}}{12} = \frac{12\%}{12} = 1\%
\]

Now we apply this interest rate to the initial balance:

\[
\text{Interest for the first month} = \text{Initial Purchase} \times \text{Monthly Interest Rate} = 600 \times 0.01 = 6
\]

Thus, the balance before making the payment will be the initial purchase amount plus the interest:

\[
\text{Credit Card Balance Before Payment} = \text{Initial Purchase} + \text{Interest} = 600 + 6 = 606
\]

So, the credit card's balance before you make the payment is **606**. The correct answer is:

**606**