Question

You make a purchase $600 on a new credit card with a yearly interest rate of 12%. You make a large payment your first month at $200. What is the credit card balance before you make the payment

Answer 1

To find the credit card balance before making the payment, we start with the purchase amount and see if any interest has been accrued.

1. **Initial Purchase Amount**: $600
2. **Yearly Interest Rate**: 12%

Assuming you are making the payment in the same month as the purchase, you would not have accrued any interest yet. However, if we consider the interest for a month:

- Monthly Interest Rate = Yearly Interest Rate / 12 = 12% / 12 = 1%

Now, we compute the interest for one month:

- Interest for one month = Principal Amount × Monthly Interest Rate
- Interest = $600 × 1% = $600 × 0.01 = $6

Now, add the interest to the initial purchase amount:

- Balance before payment = Initial Purchase + Interest
- Balance before payment = $600 + $6 = $606

So, the credit card balance before you make the payment would be **$606** if you consider one month of interest. If you are not considering the interest for this month (e.g., you are making the payment on the same day), the balance would simply be **$600**.