Your credit card offers you a promotional APR of 24% per year, which of course involves monthly compounding (it is in the tiny letters). Lets see if we learned something this week: suppose that you have a balance of $1,000.00.

1. What is the monthly interest rate that you are charged?

2. If you do not pay your credit card at all for a year, what would be the ending balance (remember, monthly compounding)?

3. What is the effective annual rate of your credit card?