What is the balance on a credit card starting in month #5? You only pay the minimum payment each month. What is the balance on a credit card starting in month #5? You only pay the minimum payment each month. Initial carry-over balance for month 1 = $943.85 APR = 26.2% Minimum payment rule = always 5.5% of card balance each month

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Parrain Parrain · Answer 1 · 2020-07-13T05:37:38+02:00

Answer: $824.73

Step-by-step explanation:

The 5.5% payment will be divided between the interest payment and a principal deduction to reduce the debt balance.

APR = 26.2%/12 = 0.0218

Month 1

Payment = 5.5% * 943.85 = $51.91

Interest = 0.0218 * 943.85 = $20.61

Balance after Principal Deduction = 943.85 - ( 51.91 - 20.61)

= $912.55

Month 2

Payment = 5.5% *912.55 = $50.19

Interest = 0.0218 * 912.55 = $19.92

Balance after Principal Deduction = 912.55 - ( 50.19 - 19.92)

= $882.28

Month 3

Payment = 5.5% *882.28 = $48.53

Interest = 0.0218 * 882.28 = $19.26

Balance after Principal Deduction = 882.28 - ( 48.53 - 19.26)

= $853.02

Month 4

Payment = 5.5% * 853.02 = $46.92

Interest = 0.0218 *853.02 = $18.62

Balance after Principal Deduction = 853.02 - ( 46.92 - 18.62)

= $824.73

Balance at end of month 4 is beginning balance for month 5.