Credit Card formula to total interest paid

eriagg

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Jan 22, 2010
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Calculations are for credit cards assuming the person just pays the minimum payment(which is a % of the balance)
Pv=Present Value
n=number months
s=multiplier for minimum payment for the month (which is a % of balance)
r=apr

B(t)=PV(z^n) where z=1+(r/1200)-(s/100)
n=log(B(t)/PV)/log(z)

So I can find the amount owed (B(t)) at any time (n)
I can also find amount of time(n) to reach a current amount owed of (B(t))

Trying to find formula to calculate total interest paid for n amount of time and also total payments for (n) amount of time.

Ex PV=$10,000
APR = 10%
s=4%

z will the be 0.968333333 using the formula

Assuming that the lowest pmt a Credit card will accept is $10 then n=214 payments.

how do you find total paymrnts and total interest paied for those 214 payments

Thanks
Eric
 
eriagg said:
Ex PV=$10,000
APR = 10%
s=4%
z will the be 0.968333333 using the formula
Assuming that the lowest pmt a Credit card will accept is $10 then n=214 payments.
Hmmm...
After 115th payment (which will be 10.21), 247.09 will remain owing.
Next payment will then be 4% of 247.09 = 9.88 : but minimum of $10 applies;
so $10 per month starts at payment 116, and continues until balance is paid:
that'll be at payment 143.

IF you mean "until balance owing is $10 or less" at which point full balance is paid,
then your 214 is correct; BUT sort of ridiculous, since 214-143 = 71 monthly payments
of less than $10 will be received...last few being under $1 !

Sooooo....what is it? Please clarify.
 
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