5. Credit card interest rates and other fees

Credit cards provide many advantages and conveniences. They also carry charges and fees that can cost more money than planned for or anticipated.

Credit Card Fees and Charges

Brians credit card has a variable interest rate, within a defined range, that changes periodically. The rate that the financial institution that issued his card uses as a basis to determine the current interest rate is called the base rate. The interest rate that applies to the credit card is computed as the sum of the base rate plus a certain percentage.

According to the terms of his card, the interest rate is the base rate plus 7%

Further, the minimum interest rate is 10%, and the maximum interest rate is 16%.

	If the computed rate is less than or equal to 10%, hell be charged 10%.
	If the computed rate is greater than or equal to 16%, hell be charged 16%.
	If the computed rate is between 10% and 16%, hell be charged the computed rate.

Today, the base rate is 11%. What is Brians interest rate today?

%

In addition to interest charges, under certain circumstances, Brian could be subject to any of the following other fees and charges:

	Late payment fees
	Over-the-limit charges
	Foreign transaction fees
	Balance transfer fees

For each of the following situations, choose the fee that most closely applies.

	Most credit card holders have a defined line of credit, which is the maximum amount the financial institution approved for Brian to owe at any time. His line of credit is $1,000. He currently owes $1,350. Brian will likely be charged .
	Brians credit card is issued in the country where he is a citizen. During a recent vacation to another continent, he used his credit card to pay for lodging, meals, and tourist attractions. Brian will likely be charged .
	Brian currently carries a balance on his MasterCard from month to month. Hes going to move his MasterCard balance to a Visa card that charges a lower interest rate. Brian will likely be charged .

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