Jerry has a credit card debt of $15,600 that he would like to reduce by applying $8,500 of his inheritance money to the balance. In addition, he would like to modify his debt payment plan to pay off the remaining balance in 24 months rather than 60 months. His credit card has an APR of 18%. How much will these changes save Jerry in finance charges (interest)?

Use the monthly interest rate, 18% ÷ 12 = 1.5%, in the loan-payment formula. Paying $15,600 over 60 months gives about $8,168.40 in total interest; paying the reduced balance of $15,600 − $8,500 = $7,100 over 24 months gives about $1,407.44 in interest. The savings are about $8,168.40 − $1,407.44 = $6,760.96, so the answer is $6,760.96.

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