Question

Natasha had a $922.93 balance on her credit card at the beginning of September. Her credit card has an APR of 9.89%, compounded monthly, and a minimum monthly payment of 3.08% of the total balance. The following table shows Natasha’s credit card purchases over the next two months.
Month
Cost ($)
September
33.70
October
61.70
October
27.80
If Natasha makes only the minimum payments, what will her balance at the beginning of November? (Assume that the interest accrues before the monthly payment, and that the monthly payment occurs at the end of the month. Round all dollar values to the nearest cent.)
a.
$1,180.48
b.
$1,064.55
c.
$1,000.93
d.
$1,123.97

Answer 1

Monthly rate = 0.0989/12 = 0.0082416667.

September:
- Start balance 922.93 + September purchases 33.70 = 956.63.
- Add interest: 956.63(1 + 0.0082416667) = 964.5142256 → 964.51 (rounded).
- Minimum payment = 0.0308 × 964.51 = 29.7069 → 29.71.
- Balance at beginning of October = 964.51 − 29.71 = 934.80.

October:
- Start balance 934.80 + October purchases 61.70 + 27.80 = 1,024.30.
- Add interest: 1,024.30(1 + 0.0082416667) = 1,032.741939 → 1,032.74 (rounded).
- Minimum payment = 0.0308 × 1,032.74 = 31.8084 → 31.81.
- Balance at beginning of November = 1,032.74 − 31.81 = 1,000.93.

Answer: (c) $1,000.93.