Tom just received a credit card with an introductory APR of 0% for nine months and a credit limit of $500. The APR for purchases after the introductory period is 19.9%. The penalty APR is 24.9% and the APR for cash advances is 20.4%. Tom uses his card at the mall and spends $360. If Tom wants to have a balance of $0 before his introductory period expires, what monthly payments should he make?

Question

Mathematics

Sylvia Carlson

7 January, 16:45

Tom just received a credit card with an introductory APR of 0% for nine months and a credit limit of $500. The APR for purchases after the introductory period is 19.9%. The penalty APR is 24.9% and the APR for cash advances is 20.4%. Tom uses his card at the mall and spends $360. If Tom wants to have a balance of $0 before his introductory period expires, what monthly payments should he make?

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Lesly Adams · Answer 1

Given:

0% - APR for nine months

$500 - credit limit

19.9% - APR after nine months

24.9% - APR penalty

20.4% - APR for cash advance

Tom spends $360. He wants to have a zero balance before his introductory period expires.

Tom must divide his spending by 9 months.

$360 : 9 mos = $40

Tom should make a monthly payment of $40 for nine months to achieve a balance of zero before the introductory period expires.