This week we will be continuing with financial mathematics. We will start the week with consumer loans and finish off the week with annuities. There are a lot of formulas to keep track of in this unit; I would recommend that you create a formula sheet for yourself to remind you of each one.
For your blog posts this week, in addition to answering the five fill-in-the-blanks, use the credit card calculator available at bankrate.com (full link below) to answer the following questions:
(1) Suppose you have a credit card balance of $5500 with a rate of 18% and a minimum payment of 4%. If you make only the minimum payment, how long will it take for you to pay off the balance? How much will you end up paying in interest?
(2) Suppose you use your credit card to purchase bedroom furniture at a total cost of $4395. If your card has an annual rate of 16.9% and a minimum payment of 3%, determine how long it will take to pay off the balance for the bedroom furniture. How much will you pay in interest?
Bankrate Credit Card Minimum Payment Calculator
Also, this week, please fill out the mid-semester evaluation, linked in the next blog post.
Challenge Problem: Find a credit card application online. Provide the link to your card. Describe the application. Your description you should include the answers to the following questions. What interest rate(s) are they offering? Does the card offer any initial benefits, such as an introductory APR? Does the card offer any rewards? If so, what are they? What is the minimum payment required each month? Are there any fees associated with the card? Do you think the card is worth getting?
After finding all of this information, find a "big ticket" item that you would like to purchase. (For example, a new TV.) If you put this item on your credit card, use the minimum payment calculator t determine how long it would take to pay off the item if you made only the minimum payments. How much would you end up paying in interest?
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