how much interest will you have to pay for a credit card balance of $554 that is 1 month overdue, if a 20% annual rate is charged?
To calculate the interest on a credit card balance, you need to know the annual interest rate, the balance amount, and the time period. In this case, the annual interest rate is 20% and the balance amount is $554. Since the balance is overdue by 1 month, we need to calculate the corresponding interest for this time period.
Step 1: Calculate the monthly interest rate.
To convert the annual interest rate to a monthly rate, divide it by 12 (the number of months in a year). In this case, the monthly interest rate would be 20% / 12 = 1.67%.
Step 2: Calculate the interest for 1 month.
Multiply the balance amount ($554) by the monthly interest rate (1.67%) to find the interest for 1 month:
Interest = $554 * (1.67% / 100) = $9.25 (rounded to the nearest cent)
Therefore, the interest on a credit card balance of $554 that is 1 month overdue at a 20% annual rate would be approximately $9.25.