Tim would like to use his income tax return to pay off one of his four credit cards. His previous plan was to pay off all four credit cards in the same timeline of 36 months. He wants to eliminate the card that is charging him the most interest on a monthly basis. The chart below outlines Tim's four credit cards, their balances, and their APRs. Which credit card should Tim use his tax return to pay off? Credit CardBalanceAPRA$1,260.0012%B$900.0018%C$1,290.009%D$1,200.0016%
Compare the cards’ monthly interest charges by multiplying each balance by its APR and dividing by 12. Card D costs $1,200 × 0.16 ÷ 12 = $16 per month, more than A ($12.60), B ($13.50), or C ($9.68). Tim should pay off Credit Card D, the card with the highest monthly interest charge.
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