The scenario:You have purchased a computer for $2000 on a credit card. The card charges 1.5% interest per month, and requires a minimum payment of 2.5% of the balance per month.
Payoff strategy 1: Each month, pay the minimum.
What will your balance owed be in 12 months?
How much will you have paid in 12 months?
How much of that is interest?
How many months will it take to reach a balance of $100? (Using this strategy, you can't ever get to $0)
When you have reached a balance of $100, how much will you have paid in interest?
There are various strategies to calculate these values: e.g. Excel spreadsheet, formulas, search the internet.
Payoff strategy 2: Each month, pay $100.
What will your balance owed be in 12 months?
How much will you have paid in 12 months?
How much of that is interest?
How many months will it take reach a balance of $0?
When you reach a balance of $0, how much will you have paid in interest?