Question

Mary’s credit card situation is out of control because she cannot afford to make her monthly payments. She has three credit cards with the following loan balances and APRs: Card 1-$4,500, 21%; Card 2-$5,700, 24%; and Card 3-$3,200, 18%. Interest compounds monthly on all loan balances. A credit card loan consolidation company has captured Mary’s attention by stating they can save Mary 25% per month on her credit card payments. It is a common practice to use 10-year repayment period to compute the monthly payments. This company charges 16.5% APR. Is the company’s claim correct?

Answer 1