You owe $976.34 on a credit card that has an interest rate of 10.75% APR you pay $100.00 at the end of each month Calculate the difference between the interst accrued by a $976.34 balance on the credit card and whats $100.00 would earn in savings account that has an interest rate of 2.75% APR over the span of one month

Question

You owe $976.34 on a credit card that has an interest rate of 10.75% APR you pay $100.00 at the end of each month Calculate the difference between the interst accrued by a $976.34 balance on the credit card and whats $100.00 would earn in savings account that has an interest rate of 2.75% APR over the span of one month

Answer 1

First, we need to calculate the monthly interest rate for the credit card:

10.75% APR / 12 months = 0.8958% monthly interest rate

Next, we need to calculate the interest accrued on the credit card balance over the span of one month:

$976.34 x 0.8958% = $8.75 in interest accrued

Now, we need to calculate the interest earned on $100.00 in a savings account with a 2.75% APR over the span of one month:

$100.00 x 2.75% / 12 months = $0.23 in interest earned

Finally, we can calculate the difference between the two:

$8.75 - $0.23 = $8.52

Therefore, over the span of one month, the difference between the interest accrued on the credit card balance and the interest earned on $100.00 in a savings account is $8.52.

Answer 2

How much is paid toward the credit card principal at the end of the first month

Answer 3

The amount paid towards the credit card principal at the end of the first month can be calculated by subtracting the interest accrued from the payment made:

$100.00 - $8.75 = $91.25

Therefore, $91.25 is paid towards the credit card principal at the end of the first month.

Answer 4

To calculate the interest accrued on the credit card balance and the amount earned in a savings account, we can use the formulas for simple interest.

First, let's find the interest accrued on the credit card balance over one month. The formula for simple interest is:

Interest = Principal x Rate x Time

In this case, the principal is $976.34, the rate is 10.75% APR, and the time is 1 month. However, we need to convert the APR to a monthly interest rate.

Monthly Interest Rate = (Annual Interest Rate / Number of Months in a Year)
= (10.75% / 12 months)
= (0.1075 / 12)
= 0.00896 (approximately)

Now, we can calculate the interest accrued on the credit card balance:

Interest Accrued on Credit Card = $976.34 x 0.00896
= $8.75 (approximately)

So, the interest accrued on the credit card balance over one month is approximately $8.75.

Next, let's calculate the amount earned in the savings account over one month. Again, we'll use the formula for simple interest, where the principal is $100.00, the rate is 2.75% APR, and the time is 1 month. We'll also convert the APR to a monthly interest rate.

Monthly Interest Rate for Savings Account = (2.75% / 12 months)
= (0.0275 / 12)
= 0.00229 (approximately)

Now, we can calculate the interest earned in the savings account:

Interest Earned in Savings Account = $100.00 x 0.00229
= $0.23 (approximately)

So, the amount earned in the savings account over one month is approximately $0.23.

Finally, to find the difference between the interest accrued on the credit card balance and the amount earned in the savings account:

Difference = Interest Accrued on Credit Card - Amount Earned in Savings Account
= $8.75 - $0.23
= $8.52 (approximately)

Therefore, the difference between the interest accrued on the credit card balance and the amount earned in the savings account over one month is approximately $8.52.