Calculating Interest and Reducing Balance Loan
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Questions and Answers

How was the interest of $3098.96 for the 1st month calculated?

Interest for 1st month = $595,000 x 0.0625 / 12 = $3098.96

What is the principal at the start of the 6th month?

$594,173.96

How much has Claire paid off the principal after 5 months?

$5,826.04

How much interest was paid in the first 5 months?

<p>$15,354.04</p> Signup and view all the answers

Calculate the balance at the end of the 2nd month.

<p>$593,343.62</p> Signup and view all the answers

What is the purpose of a credit card?

<p>To purchase items and pay for them later</p> Signup and view all the answers

Explain the concept of a credit limit.

<p>The maximum amount a cardholder is approved to spend using the credit card account.</p> Signup and view all the answers

What is the interest-free period on many credit cards?

<p>55 days</p> Signup and view all the answers

How are cash advances different from regular purchases on a credit card?

<p>Cash advances have a higher interest rate and do not have an interest-free period.</p> Signup and view all the answers

Discuss the advantages and disadvantages of credit cards with high credit limits.

<p>Advantage: Greater purchasing power; Disadvantage: Higher risk of overspending and debt accumulation.</p> Signup and view all the answers

Why should balance transfer credit cards be considered carefully?

<p>They may contain extra costs.</p> Signup and view all the answers

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