The Interest RATE refers to the interest rate per year. Interest is accumulated at the rate of 1/12 of that rate every month. So, for example, if the yearly interest rate is 12%, that means that the credit company will add 1% to the debt each month.
The PAY variable refers to the percentage of the total debt that you pay EACH MONTH. Please keep in mind that the RATE refers to the interest rate per YEAR, and the PAY percentage refers to the amount paid EACH MONTH.
Please type in the spaces provided your estimates of the time in years until the debt will
be paid in full, and the total cost including both principal and interest.
For example if you think that it will take two and one half years to pay off a debt, type 2.5 in the box
labeled TIME, if you think it will cost a total of 12,000 (debt and
interest combined) type 12,000 in the box labeled COST.