Suppose Olivia has $6,840 in credit card debt on the VB credit card which has annual interest rate of 18.8%. Olivia is considering transferring her debt to the LA credit card that offers 0% interest for 18 months. If Olivia makes a payment of $380 per month on the VB credit card, what will her balance be at the end of 18 months? Assume that no additional charges are made to the card.

We can calculate Olivia's credit card balance at the end of 18 months by following these steps:

### Step 1: Breakdown of Interest Rate
The VB credit card has an **annual interest rate of 18.8%**. We need to convert this to a monthly interest rate, as the interest compounds monthly.

\[
\text{Monthly Interest Rate} = \frac{18.8\%}{12} = \frac{18.8}{12} = 1.5667\%
\]

As a decimal, this is:

\[
1.5667\% = 0.015667
\]

### Step 2: Apply Payment Formula
Each month, Olivia makes a payment of $380. The balance for the credit card compounds with the monthly interest, and part of her payment goes towards reducing the interest, while the rest reduces the principal debt.

The formula to calculate the remaining balance after $ n $ months is:

\[
B_n = B_0 (1 + r)^n - P \left[ \frac{(1 + r)^n - 1}{r} \right]
\]

Where:
- $ B_0 $ = initial balance = $6,840
- $ r $ = monthly interest rate = 0.015667
- $ n $ = number of months = 18
- $ P $ = monthly payment = $380

Now, I'll calculate the balance.At the end of 18 months, Olivia's remaining balance on the VB credit card would be approximately **$1,216.91**.

Would you like more details on any step of the calculation or have any questions?

Here are five related questions you might find interesting:
1. How much total interest will Olivia have paid after 18 months?
2. What if Olivia could pay $450 per month instead—how much would her balance be after 18 months?
3. How much longer would it take Olivia to pay off the balance if she continues paying $380 per month?
4. What would Olivia's total savings be if she transferred her debt to the LA credit card instead?
5. What is the minimum monthly payment Olivia would need to pay off the entire balance in 18 months?

**Tip:** Always try to make payments above the minimum amount to reduce the principal and interest charges faster.

Suppose Olivia has $6,840 in credit card debt on the VB credit card which has annual interest rate of 18.8%. Olivia is considering transferring her debt to the LA credit card that offers 0% interest for 18 months. If Olivia makes a payment of $380 per month on the VB credit card, what will her balance be at the end of 18 months? Assume that no additional charges are made to the card.

Find out how much Olivia will owe after 18 months of paying $380 per month on a $6,840 credit card debt with 18.8% annual interest. This problem covers key financial concepts like compound interest and debt amortization, suitable for high school students in Grades 10-12.

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