Ben owes $3500 on his credit card which bears an interest rate of 1.5% per month or 19.6% per year. Since Ben is maxed out on his credit limit, he is no longer charging anything to the card, but is only making the required monthly minimum payment which is 1.25% of the outstanding balance. How much of Ben's next payment will go towards paying off the outstanding balance?

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Ben's monthly interest charge is 1.5% of $3500, which is $52.50. The minimum payment is 1.25% of $3500, which is $43.75. Since the minimum payment is less than the interest charge, none of it goes towards paying off the balance.

Ben Owes $3500 on His Credit Card Which Bears an Interest