Question

Laurie's new student credit card has a 0% introductory APR for six months. The minimum payment per month for the card is $20. After the introductory period the APR is 15%. Laurie buys a few presents using her credit card so that her total balance is $135. If Laurie decides to make just the minimum payment, what would her balance be when the introductory period ends?



A.
$15
B.
$35
C.
$25.12
D.
$21.63

Answer 1

the answer should be A

Answer 2

Solution:

Introductory APR for six months = 0%

Minimum payment per month = $ 20

When , the introductory period gets over, the APR= 15 %(Yearly)

Monthly APR $\frac{15}{12}$

Total balance, in Laurie's account when the introductory period gets over= $ 135

So, Minimum payment,when the introductory period ends

= 135-20×6

= 135 - 120

= $ 15

=Option (A)

But if you consider APR of 15 % for 7nth month,

Then total Payment , if rate of APR is for 12 months or for the period of 6 months  

$=15 +[\frac{135\times 15}{12 \times 100}]=1.6875,{\text{or}} 15 +[\frac{135\times 15}{6 \times 100}=3.375]=18.375$$