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To find out how much
you pay your creditor each month for the luxury of using credit go through
1. Subtract your payment
from the balance: $100. $25 = $75.
2. Look up the annual interest
rate for your card, then figure what the monthly rate would be.
rate, 18% (.18) divided by 12 months = .015
3. Multiply your answer by
the monthly interest rate: $75 x .015 = $1.125
4. Add the answers of steps
1 & 2:
+ 1.13 (interest)
Your new balance is $76.13.
You paid your creditor $1.13 this month for the luxury of owning a credit
5. Find the new balance for
each month by going through the above steps.
You may want to include formula
for calculating total payments over time.
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