In June, Jake and Jill sign up for an American Express credi…

In June, Jake and Jill sign up for an American Express credit card which has the following terms: Interest rate = 19% (compounded daily) Statement Cycle = June 15th – July 14th Grace Period = 22 days (bill due on 5th of the following month) Minimum payment = Greater of $25 or 2% statement balance Late fee = $35 On July 3, Jake and Jill make their only purchase with the card (new furniture for $1,200). They are struggling to understand how credit cards work. Help them answer the following three questions.   What is the minimum payment that Jake and Jill owe on August 5?

Following his high school graduation, Brandon buys a new lap…

Following his high school graduation, Brandon buys a new laptop for $1,500 through BestSpend’s payment program, which requires no money down and only a $40/month payment at the end of each month. Interest on purchases through this program accrues at 25% APR compounded monthly.   How much total interest will Brandon end up paying if he only ever makes the minimum $40/month payment?