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If the typical balance on Lucy's credit card is $750 and the interest rate (APR) on her credit card is 16%, how much in interest would you expect Lucy to be charged in a typical month?

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nobillionaireNobley
Given that the APR is 16%, the monthly interest rate is given by

[tex]i= \frac{(1+ \frac{0.16}{12} )^{12}-1}{12} \\ \\ =\frac{(1+0.0133 )^{12}-1}{12} \\ \\ =\frac{(1.0133 )^{12}-1}{12}= \frac{1.172-1}{12} \\ \\ = \frac{0.1723}{12} =0.01436=1.436\%[/tex]

Therefore, the amount of interest Lucy will be charged in a typical month is given by 0.01436 x $750 = $10.77

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