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The balance on a credit card, that charges a 15.5%APR interest rate, over a 1 month period is given inthe following table:Days 1-3:$200 (initial balance)Days 4-20: $300 ($100 purchase)Days 21-30: $150 ($150 payment)What is the finance charge, on the average dailybalance, for this card over this 1 month period?finance charge = $ [?]Round to the nearest hundredth.

The Balance On A Credit Card That Charges A 155APR Interest Rate Over A 1 Month Period Is Given Inthe Following TableDays 13200 Initial BalanceDays 420 300 100 class=

Sagot :

To determine the finanace charge on the average daily balance:

[tex]\begin{gathered} \text{credit card charge balance = 15.5 \% } \\ To\text{ be divide by 365} \\ \frac{15.5\text{ \% }}{365}=0.0425\text{ \%} \end{gathered}[/tex]

First, your APR is divided by 365 (or 360 in certain cases) to determine your daily rate. and the result = 0.0425 % = 0.000425

Next, the daily interest rate is multiplied by the number of days in the statement billing cycle to determine your interest rate for each particular finance charge.

Finally, this rate is multiplied by the amount of debt that is subject to your APR

[tex]\begin{gathered} \text{Day 1- 3 = 3 days x \$ 200 x 0.000425 = \$0.25479} \\ \text{Day 4-20 = 17 days x \$300 x 0.000425 = \$2.1675} \\ \text{Day 21-30 = 10 days x \$150 x 0.000425 = \$0.6375} \end{gathered}[/tex]

Therefore the finance charge on the average daily balance is

[tex]\text{ \$ 0.25475 + \$ 2.1675 + \$ 0.6375 = \$3.05975}[/tex]

Hence the finance charge on the card over the 1 month period = $3.06 (nearest hundredth)

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