Question

Tim has four credit cards with the balances and APRs listed in the chart below. What will Tim's total monthly minimum credit card payment need to be to pay off all four credit cards in 24 months?

Credit Card
Balance
APR
A
$1,260.00
12%
B
$900.00
18%
C
$1,290.00
9%
D
$1,200.00
16%

a.
$118.24
b.
$162.62
c.
$163.00
d.
$221.93

Answer 1

Use the amortization (annuity) formula for each card: monthly rate r = APR/12, n = 24 months, payment = P * [r(1+r)^n]/[(1+r)^n − 1].

Compute each card:

- A: P = 1260, r = 0.12/12 = 0.01 → payment ≈ $59.29
- B: P = 900, r = 0.18/12 = 0.015 → payment ≈ $44.95
- C: P = 1290, r = 0.09/12 = 0.0075 → payment ≈ $58.97
- D: P = 1200, r = 0.16/12 ≈ 0.0133333 → payment ≈ $58.72

Total ≈ $221.93, so answer (d).