Problem:
Mary's credit card situation is out of control because she cannot afford to make her monthly payments. She has three credit cards with the following loan balances and APRS: Card 1, $4300, 21%; Card 2, $5800, 24%; and Card 3, $3400, 19%. Interest compounds monthly on all loan balances. A credit card loan consolidation company has captured Mary's attention by stating they can save Mary 26% per month on her credit card payments. This company charges 15.5% APR. Is the company's claim correct? Assume a 10-year repayment period.
Required:
Question 1: What is Mary's current min monthly payment?
Question 2: What is Mary's min monthly payments after loan consolidation?
Note: Explain all calculation and formulas.