Reflection

The credit card laboratory assignment consists of explaining to us a possible scenario about the payment of a debt, using mathematics, and how the established amount to be paid monthly influences the amount of money that would actually be paid at the end and the time that that would entail For this assignment I used simple math: addition, subtraction, division, and multiplication, plus logarithms to solve for a variable in an equation, and percentages for some answers.

I think this project does show how mathematics can be applied to the real world. I had prior knowledge that the amount to be paid monthly influences the time in which the debt would be paid off, but I had not taken into account the interest factor, which in the end can become too high if you choose to pay an amount that is not significant each month. This type of project helps a lot because it shows us the factor to take into account when paying a debt that we have, or to make an informed decision to have a situation like the one shown in the assignment. Another example in which this type of analysis is beneficial would be when establishing the amount to be paid monthly for the purchase of a house or a car.

If you were a financial adviser, why would it be important to be able to explain the details of this project to clients?

Keeping the client informed would be the right thing to do, explaining in detail all the points to consider when choosing the amount to be paid monthly and what the figure entails, in this way clients would be 100% informed of how much the total will be pay including interest. There is another factor that should be taken into account when setting the amount to be paid monthly: the economic capacity of the client. It could be the case that a client cannot pay so much for each month, in this case he may consider that it is convenient for him to pay low rates; Although he could consider it a short-term benefit, he would have to take into account that in the long term it would not be really convenient, because he would end up paying more and over time. In the event that the client takes this factor into account, it would be more convenient for them to pay the highest rates, because although it would be a bit more burdensome for their economic capacity, in the long term it would be much better for them because they would not pay as much in interest to the client. end and the time it takes to fully pay off the debt would be much shorter.

Did this assignment change your opinion of the usefulness of math?

I have always considered the importance of mathematics in real life, from actions so common that they require simple mathematics to the most complex ones, so this assignment helped reinforce my opinion regarding its usefulness. My mother always mentioned to me how useful and practical the rule of 3 simples was when shopping in stores, she could know the discount that corresponded to the products in such a simple way using only mathematics.

What is the best plan for paying off a credit card balance? 

In my opinion, the best plan to pay the balance of a credit card would be to pay it 100% when the cut-off period arrives, since the amount borrowed would be paid off. But if you choose to pay it monthly, the best plan would be the one that is set to pay 75 dollars per month, the interest payment is low and the time to pay the debt is not very long.

What is the worst approach and why? 

The worst approach would be to pay less each month, because you would end up paying almost half of the loan. As can be seen in example 1, it was chosen to pay 25 dollars monthly, which led to paying a total of 1077 dollars in interest and that the estimated time to fully pay off the debt was 8 years.

What should you do if you can't afford the payments required for the best plan? 

Approximate the amount to be paid monthly as much as possible, so that the amount to be paid conforms to the economic capacity of the consumer. Also, you might consider talking to your financial advisor so that the plan can be readjusted so that the consumer can pay as much as they can afford.

What are two things that the "average" consumer can learn by completing this assignment?

The first would be to learn how to choose the amount to pay monthly and the second would be to deduce the repercussion that this may have on the final total to be paid and on the time in which the debt will be paid off. You'll learn that while it's hard to pay relatively high fees for your affordability, it's better if you want to pay less in the long run; time and interest will be less