10. Finance charges on credit cards Finance Charges on Credit Cards Even before you use a new credit card, what information is the institution that issued your card required by law to disclose? The rate of interest and method used to compute finance charges O The method used to compute finance charges and estimated dollar amount of finance charges O The rate of interest and estimated dollar amount of finance charges The interest rate on cash advances is generally The most common method that banks and retail credit card issuers use to compute finance charges is the average daily balance (ADB) method. You expect to actively use your card. Which variation of the ADB method will be least expensive for you? ADB excluding new purchases ADB including new purchases the rate on purchases. O It doesn't matter Consider the following case: On June 1, Hilary's credit card has a balance of $7,876.75. According to the terms of the card's lending agreement, an interest rate of 20% per year is assessed and the monthly finance charges are calculated using the Average Daily Balance (ADB) including purchases method. During the month, Hilary expects to make the purchases listed below and will make a payment of $590.76 on June 24, and has collected the following additional information: Purchases $102.39 1,722.13 1,184.19 Date June 8 June 10 June 22 June 28 15.13 Additional Information Monthly interest rate Beginning card balance Days in the month 1.67% $7,876.75 30 Use the following table to help Hilary estimate her monthly interest charge for June. Number of Days Dates 6/26/8 6/9 - 6/10 6/11 - 6/22 6/23 - 6/24 6/25 - 6/28 6/29 - 6/1 Total Average Daily Balance With Purchases Finance Charge 7 2 12 2 4 3 30 Daily Balance $7,876.75 $ Calculated Value One way by which Hilary can increase her finance charges, everything else remaining constant, is to: Buy a larger number of more expensive items using your card. Make fewer, less expensive purchases. Make larger or more frequent payments