IV. Credit Cards The author of our textbook makes some interesting comments about credit cards (p. 563): Although the card will let you use a product while paying for it, the costs associated with such cards, including their high interest rates, fees, and penalties, stack the odds in favor of your getting hurt by them. When it comes to using a credit card, consumers beware! 1. One option is to stop making purchases on your credit card and pay off the balance. Suppose your credit card has a balance of $3,900 and an annual interest rate of 16%. You decide to pay off the balance over two years. Use an online calculator or application to calculate the monthly payment you would have to make. Then determine the total interest you would pay over the length of the payoff time. Monthly payment: Total interest paid: 2. Now suppose you fell behind on your payments, and the company increased your interest rate. Repeat your calculations above using the balance of $3,900 and a two-year payoff time, but use an annual interest rate of 27%. Monthly payment: Total interest paid: 3. How much more interest would you pay during your payoff time if you were charged this higher interest rate?