Round any decimals to the nearest penny.

Question

You have a credit card with a balance of $2,856.74 at a 14.75% APR. Instead of saving the amount in question #11 in a savings account, you put the amount toward reducing your debt. How much interest do you save in 1 full month?
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Answer 1

To calculate the interest saved in one month by applying a payment toward your credit card balance, you first need to determine the monthly interest rate and then calculate the interest based on your balance.

1. Find the monthly interest rate: \[ \text{Monthly Interest Rate} = \frac{\text{APR}}{12} = \frac{14.75%}{12} \approx 1.2292% \] Converted to decimal: \[ 1.2292% = 0.012292 \]

2. Calculate the interest saved in one month from the credit card balance: \[ \text{Interest Saved} = \text{Balance} \times \text{Monthly Interest Rate} \] \[ \text{Interest Saved} = 2,856.74 \times 0.012292 \approx 35.0242 \]

3. Round to the nearest penny: \[ \text{Interest Saved} \approx 35.02 \]

So, the interest saved in one full month by applying the payment to reduce your debt is $35.02.