Ben Owes $3500 on His Credit Card Which Bears an Interest

Ben owes $3500 on his credit card which bears an interest rate of 1.5% per month or 19.6% per year. Since Ben is maxed out on his credit limit, he is no longer charging anything to the card, but is only making the required monthly minimum payment which is 1.25% of the outstanding balance. How much of Ben's next payment will go towards paying off the outstanding balance?

A) $10 per month
B) $0; Ben is not even paying enough to pay the monthly interest charge.
C) $8.75
D) $443.75

Correct Answer:

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