Your holiday ski vacation was great,but it unfortunately ran a bit over budget.All is not lost.You just received an offer in the mail to transfer your $5,000 balance from your current credit card,which charges an annual rate of 18.7 percent,to a new credit card charging a rate of 9.4 percent.You plan to make payments of $510 a month on this debt.How many less payments will you have to make to pay off this debt if you transfer the balance to the new card?

Question

Quizplus · Accepted Answer

$5,000 = $510 × [(1 - {1 + (0.094/12)]}^t)/(0.094/12)]t = ln (1/0.9232)/ln 1.007833; t = 10.24 paymentsDifference = 10.72 - 10.24 = 0.48 payments

Your Holiday Ski Vacation Was Great,but It Unfortunately Ran a Bit