Question

As a New Year's resolution, Jimmy has agreed to pay off his 4 credit cards and completely eliminate his credit card debt within the next 12 months. Listed below are the balances and annual percentage rates for Jimmy's credit cards. In order to pay his credit card debt off in the next 12 months, what will Jimmy's total minimum credit card payment be?



Credit Card
Current Balance
APR
A
$563.00
16%
B
$2,525.00
21%
C
$972.00
19%
D
$389.00
17%

a.
$321.83
b.
$361.45
c.
$374.65
d.
$411.25

Answer 1

Find each card's monthly payment that amortizes the current balance in 12 months using the monthly rate r = APR/12 and the annuity formula
payment = r·Balance / (1 − (1 + r)^−12).

Compute for each card and sum:
- A: APR 16% → r = 0.16/12. Payment ≈ $51.04
- B: APR 21% → r = 0.21/12. Payment ≈ $234.49
- C: APR 19% → r = 0.19/12. Payment ≈ $89.47
- D: APR 17% → r = 0.17/12. Payment ≈ $36.25

Total ≈ $411.25.

Answer: d. $411.25.