Solve the problem.
-The balance due on a charge card that charges 1.6% on the average unpaid balance is $4,524.87. How much could be saved if the cardholder changed to a credit card that charges 1.0% on the average unpaid balance?

Question

Quizplus · Accepted Answer

First, we need to find the average balance unpaid by dividing the balance due by the interest rate as a decimal:
$4,524.87 ÷ 0.016 = $282,805.44

Then, we can calculate the interest charged on this balance at both rates:
1.6% of $282,805.44 = $4,525.69
1.0% of $282,805.44 = $2,828.05

The difference between the two interest charges is:
$4,525.69 - $2,828.05 = $1,697.64

Therefore, the cardholder could save $27.15 by switching to a card with a lower interest rate.

Solve the Problem. -The Balance Due on a Charge Card That Charges 1.6