Phoenix has gotten herself in a bit of trouble with credit cards. The following are the current
balances and interest rates on her credit cards:

• Visa: $6,750 at 19.8% APR
• MasterCard: $8,267 at 16.5% APR
• Gas card: $1,579 at 22.65% APR
• Department store card: $3,345 at 21.99% APR

Phoenix earns $3,000 per month as a painter. Can she afford this debt? Develop a debt plan so
that her credit cards are paid off in two years.

2. Horace paid for a $0.79 pack of gum with a credit card. Due to his revolving balance, he will
end up paying 23.49% interest on that pack of gum for 10 years. How much did it really cost
Horace to charge that pack of gum? How much would a $1,000 couch really cost him?

3. You want to buy $10,000 in furniture and electronics for your new home. Research different
credit card offers and, assuming you qualify for the full amount, choose the card(s) on which
you will charge this purchase and explain your choice.

Answer rating: 100% (QA)

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