Question

Michelle has four credit cards with the balances and interest rates listed below. If Michelle wanted to pay off all four credit cards in 36 months, what would her total monthly credit card payment be?

Credit Card
Balance
APR
#1
$4,380
17%
#2
$1,365
19%
#3
$2,480
23%
#4
$5,000
15%
a.
$367.36
b.
$393.20
c.
$475.67
d.
$481.44

Answer 1

Use the monthly payment formula for an amortizing loan: payment = rB / (1 − (1+r)^−n), with r = APR/12 and n = 36.

Compute each card's monthly payment:
- Card 1: B = 4380, r = 0.17/12 = 0.0141667 → payment ≈ $156.23
- Card 2: B = 1365, r = 0.19/12 = 0.0158333 → payment ≈ $50.05
- Card 3: B = 2480, r = 0.23/12 = 0.0191667 → payment ≈ $95.99
- Card 4: B = 5000, r = 0.15/12 = 0.0125 → payment ≈ $173.49

Total monthly payment ≈ 156.23 + 50.05 + 95.99 + 173.49 = $475.67.

Answer: c. $475.67