You owe $1,945.61 on a credit card that has an 11.2% APR. the minimum payment due is $156.00 you decide to pay $300.00 goes much do you save in interest after one month by paying more than the minimum assuming you make the payment at the beginning of the month
To calculate the interest saved, we need to first calculate the interest charged for each payment amount.
Minimum payment:
Interest charged = (APR/365) * balance * 30
= (0.112/365) * 1945.61 * 30
= $18.96
New balance = balance + interest charged - minimum payment
= 1945.61 + 18.96 - 156
= $1,808.57
$156 paid towards principal.
Additional payment of $300:
Interest charged = (APR/365) * balance * 30
= (0.112/365) * 1945.61 * 30
= $18.96
New balance = balance + interest charged - total payment
= 1945.61 + 18.96 - 300
= $1,664.57
$456 paid towards principal.
Therefore, by paying an extra $144 towards the principal ($300 - $156), the interest saved for one month is:
$18.96 - $18.84 = $0.12
So, you save $0.12 in interest for one month.