Mathematics
gaccionejayden
35

Tony wants to pay off his credit card balances within 12 months. He is trying to decide if he should use his $1,000 in savings to pay off part of the balances or if he should transfer the balances to a new card with a low introductory rate. The new credit card has an introductory rate of 7% but charges a balance transfer fee of $75 for each balance transfer. Evaluate Tony's options and recommend the debt management plan that would give him the lowest monthly payment. Credit Card A: $794 Credit Card B: $579 a. Pay off Credit Card B using the savings. Transfer the balance of Credit Card A to the new card. b. Pay off Credit Card A using the savings. Transfer the balance of Credit Card B to the new card. c. Pay off $500 from both Credit Card A and Credit Card B. Transfer the remaining balances from both cards to the new card. d. Pay off all of Credit Card A, and $206 of Credit Card B. Transfer the remaining balance of Credit Card B to the new card.

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(1) Answers
longhornlova12

If the current card has a higher rate than 7% and the two credits get interest separately, then it would be best if one of the credits are fully paid with the savings, preferably the greater amount. So, the answer is: d. Pay off all of Credit Card A, and $206 of Credit Card B. Transfer the remaining balance of Credit Card B to the new card.

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