A credit card has a balance of $⁢2,000 and a 15% APR. If a fixed payment of $100 is made each month, how will the balance after a year compare to making only the minimum payment of 2% of the balance each month?

The minimum payment starts at 2% of $2,000, which is $40—less than the fixed $100 payment. As the balance falls, 2% of the balance falls too, so the minimum-payment plan continues to pay less each month. With the same interest rate in both cases, the fixed-payment plan will leave a lower balance after a year. Choice A is correct.

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