You have a credit card with a balance of $1,256.34 and a 9.5% APR. A late payment fee of $29.00 is added to the principal if you pay after 5/28. You make a payment for $200.00 on 5/28. How much interest did you pay?

Question

(1 point)
Responses

$100.35
$100.35

$9.95
$9.95

$8.36
$8.36

$119.35

Answer 1

To calculate the interest you paid on the credit card, we need to determine the interest accruing on the balance after the payment and considering the APR.

1. Initial Balance: $1,256.34
2. APR: 9.5% (expressed as a decimal: 0.095)
3. Payment Made: $200.00 on 5/28

Step 1: Calculate Interest for One Month

Since no late payment was made (the payment was made on time), we don't have to factor in the late payment fee. The balance after the payment is:

New Balance = Initial Balance - Payment = $1,256.34 - $200.00 = $1,056.34

Step 2: Calculate Monthly Interest

To find the monthly interest rate, divide the APR by 12:

\[ \text{Monthly Interest Rate} = \frac{0.095}{12} \approx 0.00791667 \]

Step 3: Calculate Interest on the New Balance

Now, calculate the interest accrued on the new balance of $1,056.34 over one month:

\[ \text{Interest} = \text{New Balance} \times \text{Monthly Interest Rate} = $1,056.34 \times 0.00791667 \approx $8.36 \]

Therefore, the interest you paid is approximately $8.36.

Answer:

$8.36