An individual has a credit card debt of P3,000 with an annual interest rate of 18%. If they want to pay off the debt in 12 months, what would be the required monthly payment to cover the interest?

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To solve for the required monthly payment to cover the interest and pay off the credit card debt in 12 months, we will use the formula for calculating the monthly payment, which includes both principal and interest:

### Formula for Monthly Payment:

\[
M = \frac{P \cdot r \cdot (1 + r)^n}{(1 + r)^n - 1}
\]

Where:
- \(M\) = Monthly payment
- \(P\) = Principal amount (₱3,000)
- \(r\) = Monthly interest rate (annual rate divided by 12)
- \(n\) = Number of months (12 months)

#### Step 1: Determine Monthly Interest Rate
The annual interest rate is 18%, so we need to convert this to a monthly interest rate.

\[
r = \frac{18\%}{12} = \frac{0.18}{12} = 0.015 \text{ (or 1.5% per month)}
\]

#### Step 2: Apply Values to the Formula
We now substitute the values into the formula:

\[
M = \frac{3000 \cdot 0.015 \cdot (1 + 0.015)^{12}}{(1 + 0.015)^{12} - 1}
\]

Let's break down the expression:

\[
(1 + 0.015)^{12} = (1.015)^{12} \approx 1.195618
\]

\[
M = \frac{3000 \cdot 0.015 \cdot 1.195618}{1.195618 - 1}
\]

\[
M = \frac{3000 \cdot 0.015 \cdot 1.195618}{0.195618}
\]

\[
M = \frac{53.80281}{0.195618} \approx 275.05
\]

#### Final Monthly Payment:
The required monthly payment to cover the interest and principal is approximately **₱275.05**.

### Conclusion:
The individual will need to pay ₱275.05 per month to pay off the ₱3,000 debt in 12 months, including interest.

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Would you like more details or have any questions about this process?

### Related Questions:
1. How does compounding interest affect loan repayment amounts?
2. What would the monthly payment be if the debt is paid off in 24 months?
3. How is the total interest paid over 12 months calculated?
4. What if the interest rate were 12% annually instead of 18%?
5. How can paying more than the minimum monthly payment reduce total interest?

**Tip:** Always aim to pay more than the minimum payment to reduce interest over time.

An individual has a credit card debt of P3,000 with an annual interest rate of 18%. If they want to pay off the debt in 12 months, what would be the required monthly payment to cover the interest?

Find out how to calculate the required monthly payment to pay off a ₱3,000 credit card debt with 18% annual interest over 12 months. This solution explains the step-by-step use of interest and loan repayment formulas, suitable for high school students in Grades 10-12.

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