Question

You have $2,450 balance on your charge card, and the finance charge is 14.9% annually. You send in the minimum monthly payment requested, which is $40.

How much of this payment decreases your debt_______________________?

And how much is the finance charge_________________?

Answer 1

Balance on Credit Card = $2450

Minimum Monthly Payment = $40

- You paid the minimum monthly payment.

Interest(or Finance) Charges included in that minimum monthly payment = Balance on Credit Card*Finance Charge Rate*1/12

Interest(or Finance) Charges = $2450*14.9%*1/12

Interest(or Finance) Charges = $30.42

So, the finance charge is $30.42

- The amount by which minimum monthly payment decrease the debt = Minimum Monthly Payment- Interest(or Finance) Charges

= $40 - $30.42

= $9.58

So, the amount by which minimum monthly payment decrease the debt is $9.58

If you need any clarification, you can ask in comments.    

If you like my answer, then please up-vote as it will be motivating