Suppose you owe $2,000 on a Visa card and the interest rate is 1.5% per month.

a) What is the Effective Annual Rate? What is the Annual percentage rate? Which interest rate should you use when calculating loan payments?

b. If you make the minimum monthly payment of $40, how many years will it take to pay off the $2,000? (note: about 25% of Americans who have at least one credit card make only the minimum payment)

c. if you pay an extra $10 a month ($50 in total), how long will it take to pay off the balance? And how much interest and how many years do you save compared to when you were paying only $ 40?