In researching credit card companies, you find that current rates vary from 10% APR to 30% APR based on the borrowers credit history, and minimum payments typically range from 2% to 10% of the balance.

Suppose you use the card to make a purchase in the amount of $MMDD where MMDD represents the month and date of your birthdate. For example if your birthdate is 10/04, you will make a purchase in the amount of $1004. A birthday of Feb 17 would mean your purchase amount is $217. Assume that this is the only purchase on the card and that you make no more charges.

Initial Post Directions:

Read the assignment rubric to learn the requirements for this assignment.

Read Sections 4.3, 4.4, 4.5, and 4.7 in the text before completing this assignment.

Select one of the following credit cards:

Card A: 14.99% APR, minimum payment of 3% of the balance or $10, whichever is more

Card B: 22.99% APR, minimum payment of 5% of the balance or $25, whichever is more

Card C: Choose one of your own credit cards. Identify the APR and minimum payment. Note: Assume a monthly compounding and payment schedule for all options.

Provide your birthdate (month and day) and identify the initial purchase amount as described in the Overview above.

Make a "purchase" in the amount of $MMDD. Do a little online shopping; what you might purchase for approximately this amount? A big screen TV? A pair of airline tickets? A pet accessory? Identify your purchase and share a picture of it. The amount doesnt need to be exact, just close.

Use the selected card for your "purchase;" assume you make no additional purchases. Calculate:If you make only the minimum payment each month,

How long will it take for you to pay off the entire card balance?

What will the total cost be?

If you want to pay off the entire balance in 6 months,

How much should each payment be?

What will the total cost be?

Compare both total costs to the original purchase value. Discuss your findings.

Show your work. Make sure to show any formulas and define values for all variables.

Response Post Directions:

Select a classmates post. Confirm their work is correct or explain any errors your find.

Decide that you also need one of whatever they bought.

Remind us of your credit card selection by restating your APR and minimum payment terms as well as your original purchase amount and item.

Use the following as a template:

Credit Card: Card A, B, or C

APR:

Monthly rate (r):

Minimum payment terms:

Initial purchase amount:

Additional purchase amount (your classmates amount):

Create an Excel worksheet like the example below. Add their purchase amount in Month 2. Fill in the table for as many months as needed until the balance is below $25 (assuming no additional purchases).

Post your completed table. Explain any formulas, variables or other considerations as needed.

How long will it take you to reach a balance that is below $25? What did you learn from this discussion topic? (Post this to the discussion, not in the Excel file.)