Assume You Owe a Large Balance on Your Credit Card

question 53

Multiple Choice

Assume you owe a large balance on your credit card and only pay the monthly minimum payment equal to 1% of the balance.If the annual interest rate on the credit card is 18%,how many years will it take you to pay off the balance assuming you do not make any additional charges to the card?

• A) 7.8 years
• B) 5 years
• C) you will never pay off the balance
• D) not enough information is provided to determine the time

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Definitions:

Disparity

The existence of inequalities or differences in conditions, status, or treatment between people or groups.

Rich and Poor

Terms reflecting the socioeconomic disparity between individuals or groups with significant wealth and those living in conditions of poverty.

Upper Limit

The maximum capacity, value, or level that can be reached or permitted.

Welfare Systems

Governmental programs designed to provide financial or other aid to individuals in need to ensure their basic living standards.