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Credit Card Minimum Payment Trap
The Minimum Payment Trap - A Quiz
Making minimum monthly payments of 2.5% of the outstanding balance, how long will it take to pay off A. $500.00, B. $1,000.00 and C. $2,000.00. Interest rate on the card is 16.5%.
I.
$ 500.00
a. 0 year, 10 months
b. 1 year, 7 months
c. 2 years, 8 months
d. 3 years, 9 months
Answer
II.
$ 1,000.00
a. 3 years, 3 months
b. 3 years, 8 months
c. 6 years, 5 months
d. 8 years, 9 months
Answer
III.
$ 2,000.00
a. 6 years, 1 months
b. 10 years, 0 months
c. 12 years, 5 months
d. 13 years, 9 months
Answer
Answers
I. d. - 3 years, 9 months (Total Interest Paid $173.45 or 35% of the original $500.00 balance)
Answer
II. d. - 8 years, 8 months (Total Interest Paid $765.95 or 77% of the original $1,000.00 balance)
Answer
III. d. - 13 years, 9 months (Total Interest Paid $1,988.13 or 99% of the original $2,000.00 balance)
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