To solve for the interest rate of your credit card, you need to understand which variables in the above formula you have. If your minimum monthly payment is $22 on the $1000 credit card bill, which variables do you know the values of? Manipulate the formula so it will calculate the interest rate you are paying instead of the amount of money you are paying.

Now that you have a formula that will give you the interest rate, plug in the values for the problem and solve for that interest rate. Interest rates are usually represented for a time period: over what time period does this rate apply? What would the interest rate be if it were a yearly rate?

Now consider a different situation. Payday loans are a type of loan where you can get money for a future paycheck, typically two weeks in advance. A typical payday loan service might charge $15 for a loan against a paycheck you will receive in two weeks. The interest rate is 10% of the paycheck over that two- week period. Given this information, which variables in the interest formula are known? Develop a formula that will solve for the unknown variable.