Interest rates on credit cards

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Interest rates on credit cards can range between 7% and 36%. Each month, credit card companies calculate the minimum payment of a credit card based on the current Math 104, Spring 2016 2 balance on the card (for instance, some credit cards require you to pay 3% of the current balance each month).

Cara recently made a $800 purchase with her credit card to buy a laptop. Her credit card has a 20% interest rate, compounded monthly. Cara decides she will pay $25 a month (this is bit higher than the minimum payment)

(a) How long will it take Cara to pay off the balance on her credit card? Round your answer to the next month.

(b) Using your answer from (a), approximately how much will she have pay in interest?

(c) How do (a) and (b) change if Cara instead makes monthly payments of $50?

Reference no: EM131059704

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