Credit Card Interest

Requirements Clarification & Assessment

1. Clarifying the Problem Statement:

   • Objective: Determine which individual accumulates more debt over a year given their credit card usage and payment habits.
   • Key Parameters:
     • Person 1:
       • APR: 5%
       • Monthly Spending: $500
       • Payment: 60% of the monthly statement balance
     • Person 2:
       • APR: 1%
       • Monthly Spending: $1000
       • Payment: 60% of the monthly statement balance

2. Assumptions:

   • Each individual uses the same amount of credit each month.
   • The APR is applied monthly (compounded monthly).
   • The monthly payment covers 60% of the statement balance, leaving 40% to accrue interest.
   • No additional fees or penalties are considered.

3. Data Needed:

   • Monthly interest rates derived from APR.
   • Outstanding balance calculation for each month.

4. Constraints:

   • Only the given APR and spending amounts are considered.
   • The interest is compounded monthly based on the outstanding balance after paying 60% of the statement balance.