When Beth finishes college, she has a balance of $2876.37 on a credit card with an annual percentage rate (APR) of 17.3%. She decides not to make any additional purchases with her card until she has paid off the balance. Assuming the minimum payment is 2% of the balance, find her minimum monthly payment.

Question

When Beth finishes college, she has a balance of $2876.37 on a credit card with an annual percentage rate (APR) of 17.3%. She decides not to make any additional purchases with her card until she has paid off the balance.  Assuming the minimum payment is 2% of the balance, find her minimum monthly payment.

drwls · Answer

Her minimum monthly payment starts out at 2% of the balance due, or %57.53. It gradually decreases after that. After 30 days, her next balance due will be
2876.37 - 57.53 + 41.47 (interest) = 2860.31, and the minimum payment will be $57.21