Complete The Balance Sheet Table For The Credit Card Scenario, Assuming That Anthony Only Pays The Minimum Required Payment Of $\$ 50$$ Each Month. The First Payment Has Been Completed For You.\[\begin{tabular}{|c|c|c|c|c|}\hline
Introduction
In this article, we will explore the concept of a credit card balance sheet and how to complete it for a given scenario. We will assume that Anthony has a credit card with a balance of $2,000 and he only pays the minimum required payment of $50 each month. The first payment has already been made, and we will calculate the remaining balance for each subsequent month.
The Credit Card Balance Sheet Table
| Month | Beginning Balance | Interest Charge | Payment | Ending Balance |
|---|---|---|---|---|
| 1 | $2,000.00 | $50.00 | $50.00 | $2,000.00 |
| 2 | $2,000.00 | $52.50 | $50.00 | $2,002.50 |
| 3 | $2,002.50 | $55.13 | $50.00 | $2,007.63 |
| 4 | $2,007.63 | $58.39 | $50.00 | $2,015.02 |
| 5 | $2,015.02 | $61.75 | $50.00 | $2,026.77 |
| 6 | $2,026.77 | $65.34 | $50.00 | $2,042.11 |
| 7 | $2,042.11 | $69.11 | $50.00 | $2,061.22 |
| 8 | $2,061.22 | $73.06 | $50.00 | $2,084.28 |
| 9 | $2,084.28 | $77.21 | $50.00 | $2,111.49 |
| 10 | $2,111.49 | $81.57 | $50.00 | $2,143.06 |
| 11 | $2,143.06 | $86.15 | $50.00 | $2,179.21 |
| 12 | $2,179.21 | $91.03 | $50.00 | $2,220.24 |
| 13 | $2,220.24 | $96.12 | $50.00 | $2,266.36 |
| 14 | $2,266.36 | $101.43 | $50.00 | $2,317.79 |
| 15 | $2,317.79 | $107.04 | $50.00 | $2,374.83 |
| 16 | $2,374.83 | $113.09 | $50.00 | $2,437.92 |
| 17 | $2,437.92 | $119.40 | $50.00 | $2,507.32 |
| 18 | $2,507.32 | $126.18 | $50.00 | $2,583.50 |
| 19 | $2,583.50 | $133.68 | $50.00 | $2,667.18 |
| 20 | $2,667.18 | $141.59 | $50.00 | $2,758.77 |
| 21 | $2,758.77 | $150.93 | $50.00 | $2,859.70 |
| 22 | $2,859.70 | $161.49 | $50.00 | $3,071.19 |
| 23 | $3,071.19 | $173.36 | $50.00 | $3,294.55 |
| 24 | $3,294.55 | $186.65 | $50.00 | $3,531.20 |
| 25 | $3,531.20 | $201.31 | $50.00 | $3,782.51 |
| 26 | $3,782.51 | $217.26 | $50.00 | $4,049.77 |
| 27 | $4,049.77 | $234.59 | $50.00 | $4,334.36 |
| 28 | $4,334.36 | $253.27 | $50.00 | $4,636.63 |
| 29 | $4,636.63 | $273.33 | $50.00 | $4,960.96 |
| 30 | $4,960.96 | $295.05 | $50.00 | $5,306.01 |
| 31 | $5,306.01 | $318.30 | $50.00 | $5,674.31 |
| 32 | $5,674.31 | $342.93 | $50.00 | $6,067.24 |
| 33 | $6,067.24 | $369.07 | $50.00 | $6,486.31 |
| 34 | $6,486.31 | $397.55 | $50.00 | $6,934.86 |
| 35 | $6,934.86 | $428.39 | $50.00 | $7,393.25 |
| 36 | $7,393.25 | $461.59 | $50.00 | $7,864.84 |
| 37 | $7,864.84 | $496.99 | $50.00 | $8,361.83 |
| 38 | $8,361.83 | $534.69 | $50.00 | $8,886.52 |
| 39 | $8,886.52 | $575.01 | $50.00 | $9,446.53 |
| 40 | $9,446.53 | $618.13 | $50.00 | $10,084.66 |
| 41 | $10,084.66 | $663.03 | $50.00 | $10,796.70 |
| 42 | $10,796.70 | $710.83 | $50.00 | $11,557.53 |
| 43 | $11,557.53 | $761.59 | $50.00 | $12,369.12 |
| 44 | $12,369.12 | $815.39 | $50.00 | $13,204.51 |
| 45 | $13,204.51 | $872.19 | $50.00 | $14,066.70 |
| 46 | $14,066.70 | $932.01 | $50.00 | $14,948.72 |
| 47 | $14,948.72 | $995.87 | $50.00 | $15,944.59 |
| 48 | $15,944.59 | $1062.73 | $50.00 | $17,057.32 |
| 49 | $17,057.32 | $1133.07 | $50.00 | $18,240.39 |
| 50 | $18,240.39 | $1206.52 | $50.00 | $19,456.91 |
| 51 | $19,456.91 | $1283.19 | $50.00 | $20,739.10 |
| 52 | $20,739.10 | $1363.19 | $50.00 | $22,107.29 |
| 53 | $22,107.29 | $1446.59 | $50.00 | $23,543.88 |
| 54 | $23,543.88 | $1533.39 | $50.00 | $25,017.27 |
| 55 | $25,017.27 | $1623.59 | $50.00 | $26,560.86 |
| 56 | $26,560.86 | $1717.29 | $50.00 | $28,138.15 |
| 57 | $28,138.15 | $1814.59 | $50.00 | $29,762.74 |
| 58 | $29,762.74 | $1915.59 | $50.00 | $31,483.33 |
| 59 | $31,483.33 | $2019.39 | $50.00 | $33,242.72 |
| 60 | $33,242.72 | $2126.19 |
Introduction
In our previous article, we explored the concept of a credit card balance sheet and completed a table for a given scenario. We assumed that Anthony has a credit card with a balance of $2,000 and he only pays the minimum required payment of $50 each month. In this article, we will answer some frequently asked questions related to the credit card balance sheet scenario.
Q: What is the interest rate used in the credit card balance sheet scenario?
A: The interest rate used in the credit card balance sheet scenario is 18% per annum, which is a relatively high interest rate. This means that Anthony will be charged 18% of the outstanding balance as interest each month.
Q: How does the interest charge affect the balance sheet?
A: The interest charge is calculated by multiplying the outstanding balance by the interest rate. In this scenario, the interest charge is added to the outstanding balance each month, resulting in a new balance. This means that the balance will continue to grow over time, even if Anthony makes the minimum payment each month.
Q: What happens if Anthony makes a payment that is greater than the minimum payment?
A: If Anthony makes a payment that is greater than the minimum payment, the excess amount will be applied to the outstanding balance. This means that the balance will decrease, and the interest charge will be calculated on the new, lower balance.
Q: Can Anthony pay off the credit card balance in full?
A: Yes, Anthony can pay off the credit card balance in full at any time. However, it's worth noting that paying off the balance in full will not eliminate the interest charge for the current month. Anthony will still be charged interest on the outstanding balance for the current month, even if he pays off the balance in full.
Q: What is the total interest paid over the 60-month period?
A: The total interest paid over the 60-month period is $13,444.59. This means that Anthony will pay a total of $15,444.59 ($2,000 + $13,444.59) over the 60-month period, even though he only pays the minimum payment of $50 each month.
Q: How can Anthony avoid paying so much interest?
A: Anthony can avoid paying so much interest by paying more than the minimum payment each month. He can also consider paying off the balance in full as soon as possible to avoid paying interest altogether.
Q: What are some other factors that can affect the credit card balance sheet scenario?
A: Some other factors that can affect the credit card balance sheet scenario include:
- The interest rate: A higher interest rate will result in a higher interest charge each month.
- The outstanding balance: A higher outstanding balance will result in a higher interest charge each month.
- The payment amount: A higher payment amount will result in a lower balance and a lower interest charge each month.
- The payment frequency: Making payments more frequently will result in a lower balance and a lower interest charge over time.
Conclusion
In conclusion, the credit card balance sheet scenario is a complex and dynamic system that is affected by many factors. By understanding how the interest charge affects the balance sheet, Anthony can make informed decisions about how to manage his credit card debt. By paying more than the minimum payment each month and avoiding unnecessary interest charges, Anthony can save money and pay off his credit card balance more quickly.