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    Interest at the end of the year

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    You receive a credit card application offering an intro rate of 2.4% per year, compounded monthly for the first six months, and then increasing to 18% compounded monthly. Assuming you transfer $6,000 from another card and make no subsequent payments, how much interest will you owe at the end of the first year?

    Use formulas, not excel

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    Solution Preview

    The interest rate applicable for the initial six months is 2.4%. We calculate the interest amount for the first six months using this rate. The interest is compounded monthly, so we ...

    Solution Summary

    The solution explains how to calculate the amount of interest owed at the end of the year with change in interest rates during the year.