Question

Assuming no more purchases, the annual interest rate on a credit card is 24.99%. If a payment of $100 is made each month, is the following statement logical or illogical? Option 1: Logical Option 2: Illogical Option 3: Not enough information Option 4: Depends on the credit card terms

Answer 1

The statement is illogical because the interest accrued would be higher than the payment each month, resulting in an increasing balance over time.

Step-by-step explanation:

The statement is illogical. If a payment of $100 is made each month, assuming no more purchases, it would take approximately 11 months to pay off a debt of $1000, which accrues interest at an annual rate of 24.99%. However, the credit card company will continue to charge interest on any remaining balance each month until it is fully paid off. The interest accrued would be higher than the $100 payment each month, resulting in an increasing balance over time.

Learn more about Credit card interest