Solve the problem.
-Tom has a balance of $\$ 4261.15$ on a credit card with an annual percentage rate (APR) of $13.7 \%$. His credit card requires a minimum monthly payment of $2 \%$ of the balance. If he transfers his balance to a credit card with an APR of $9.2 \%$ how much more of his first payment would be applied to reduce the principal than if he had not transferred his balance?
A) $\$ 15.98$ more will be applied to principal
B) $\$ 19.88$ more will be applied to principal
C) \$32.67 more will be applied to principal
D) $\$ 52.55$ more will be applied to principal

Question

Quizplus · Accepted Answer

The minimum payment on the original card is $2 \% \times \$ 4261.15 = \$ 85.22$. The interest on the original card is $13.7 \% \times \$ 4261.15 / 12 = \$ 52.55$. The amount applied to principal on the original card is $85.22 - 52.55 = \$ 32.67$. The minimum payment on the new card is $2 \% \times \$ 4261.15 = \$ 85.22$. The interest on the new card is $9.2 \% \times \$ 4261.15 / 12 = \$ 32.67$. The amount applied to principal on the new card is $85.22 - 32.67 = \$ 52.55$. The difference between the amount applied to principal on the new card and the amount applied to principal on the original card is $52.55 - 32.67 = \$ 19.88$.

Solve the Problem $4261.15\$ 4261.15$4261.15 On a Credit Card with an Annual Percentage Rate (APR)

Solve the Problem $\$ 4261.15$ On a Credit Card with an Annual Percentage Rate (APR)