Using Credit

Question 1

Natasha had a $922.93 balance on her credit card at the beginning of September. Her credit card has an APR of 9.89%, compounded monthly, and a minimum monthly payment of 3.08% of the total balance. The following table shows Natasha’s credit card purchases over the next two months. Month Cost ($) September 33.70 October 61.70 October 27.80 If Natasha makes only the minimum payments, what will her balance at the beginning of November? (Assume that the interest accrues before the monthly payment, and that the monthly payment occurs at the end of the month. Round all dollar values to the nearest cent.)

Revolt · Accepted Answer

$1,000.93

Question 2

What is an open line of credit?

Revolt · Accepted Answer

A line of credit against which additional debt may be drawn.

Question 3

Use the following compound interest formula to complete the problem. Victor has a credit card with an APR of 13.66%, compounded monthly. He currently owes a balance of $1,349.34. Assuming that Victor makes no purchases or payments, how much will he owe after one year, to the nearest cent?

Revolt · Accepted Answer

$1,545.65

Question 4

Marilyn has two credit cards, D and E. Card D has a balance of $691.64, and Card E has a balance of $1,014.22. The minimum monthly payment on Card D is 3.57% of the total balance, and the minimum monthly payment on Card E is 2.51% of the total balance. How much greater is the minimum payment on Card E than on Card D?

Revolt · Accepted Answer

$0.77

Question 5

Which of the following types of credits would best describe credit cards?

Revolt · Accepted Answer

open and unsecured

Question 6

Use the following compound interest formula to complete the problem. Currently you have two credit cards, H and I. Card H has a balance of $1,186.44 and an interest rate of 14.74%, compounded annually. Card I has a balance of $1,522.16 and an interest rate of 12.05%, compounded monthly. Assuming that you make no purchases and no payments with either card, after three years, which card’s balance will have increased by more, and how much greater will that increase be?

Revolt · Accepted Answer

Card I’s balance increased by $53.16 more than Card H’s balance.

Question 7

Jeff has a balance of $2,513.77 on his credit card. He would like to pay off his card over the course of a year and a half by making identical monthly payments. The APR on his card is 10.66%, compounded monthly. Assuming that Jeff makes no additional purchases with his card, how much will he have to pay every month to reach his goal? (Round all dollar values to the nearest cent.)

Revolt · Accepted Answer

$151.73

Question 8

What is the prime rate?

Revolt · Accepted Answer

The prime rate is the best interest rate that banks offer their most creditworthy customers.

Question 9

You are looking for your first credit card. You plan to use this credit card only for emergencies and to pay the credit card balance in full each month. Which credit card feature is most important?

Revolt · Accepted Answer

No annual fee

Question 10

Fran is going to transfer her credit card balance over to a new card. She has an existing balance of $752.69. Her current card charges her a transfer fee of 12.5%, added to her balance, for transferring her debt. The new card has an opening fee of $50, which is also added to her balance. She will also have to make an immediate minimum payment, which is 3.35% of her total balance. How much will her balance be after she makes this payment, assuming that she pays the minimum amount? Round all dollar values to the nearest cent.

Revolt · Accepted Answer

$866.74

Using Credit Answers

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