The Choices
Which answer is correct?
At 22% APR, the first month of interest is roughly $92.
- A Paid off in under 2 years
- B Paid off in about 4 years
- C Paid off in about 6 years
- D Balance grows forever
Answer: B · Paid off in about 4 years
A $150 fixed payment beats the interest and pays the balance down, but slowly. It takes roughly 4 years because early payments mostly fight interest.
The money lesson
A fixed $150 payment does pay it off, but not quickly. At 22% APR, it takes roughly 4 years because the early payments are heavily eaten by interest.
This puzzle is designed to make one financial rule easier to remember. Use it as a starting point, then run your own numbers before making a real-world decision.