Question

Suppose you have a credit card with a 24.31% APR on purchases. You pay the minimum payment by the statement due date, leaving an outstanding balance of $3,200. How much money would you save by paying off the balance 1 day later as opposed to paying it off 30 days later?

Answer 1

Answer:

  $61.81

Step-by-step explanation:

29 days' interest on  $3200 will be ...

  I = Prt = $3200·(0.2431)·(29/365) ≈ $61.81

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We assume "exact interest", using a daily rate that is the annual rate divided by 365. In the formula above, the r is the annual rate, and the t is the time in years. 29 days is then 29/365 year.