Homework help
5. Assume the following: Melita carried an average daily balance of $ 475 on her credit card this month. Her previous balance last month was $ 896, compared to a balance of $ 82 this month. There are 30 days in this billing cycle and Melita always makes a payment on the fifteenth of the month. Based on this information, calculate the monthly interest charges for credit card accounts charging 16 percent, 18 percent, and 20 percent interest. Complete the following chart. Since the average daily balance is the most commonly used balance calculation method, is shopping for a lower interest rate really that important? 16% 18% 20% Average Daily Balance $6.33 Previous Balance $13.44 Adjusted Balance $1.37 The three primary methods used to determine interest charges on unpaid credit balances are (1) the average daily balance method, (2) the previous balance method, and (3) the adjusted balance method. The monthly interest charges can be compared using the following table: 18% 20% 16% $6.33 Average Daily Balance Previous Balance Adjusted Balance $13.44 $1.37 The amount Melita will pay in monthly interest charges based on the $ 475 average daily balance for the credit card account charging an annual rate of 18 percent is $ (Round to the nearest cent.) The amount Melita will pay in monthly interest charges based on the $ 475 average daily balance for the credit card account charging an annual rate of 20 percent is $ (Round to the nearest cent.) The amount Melita will pay in monthly interest charges based on the $ 896 previous balance for the credit card account charging an annual rate of 16 percent is $ (Round to the nearest cent.) The amount Melita will pay in monthly interest charges based on the $ 896 previous balance for the credit card account charging an annual rate of 20 percent is $ (Round to the nearest cent.) The amount Melita will pay in monthly interest charges based on the $ 82 adjusted balance for the credit card account charging an annual rate of 16 percent is $ (Round to the nearest cent.) The amount Melita will pay in monthly interest charges based on the $ 82 adjusted balance for the credit card account charging an annual rate of 18 percent is $ (Round to the nearest cent.) Since the average daily balance is the most commonly used balance calculation method, is shopping for a lower interest rate really that important? (Select the best answer below.) O A. Shopping for a lower interest rate is not important because the adjusted balance method will always result in lower monthly interest charges. It is more important to find a credit card that uses the adjusted balance method than to shop for a lower interest rate. OB. Shopping for a lower interest rate important because it results in lower monthly interest charges for all three methods for calculating interest payments. 5. Assume the following: Melita carried an average daily balance of $ 475 on her credit card this month. Her previous balance last month was $ 896, compared to a balance of $ 82 this month. There are 30 days in this billing cycle and Melita always makes a payment on the fifteenth of the month. Based on this information, calculate the monthly interest charges for credit card accounts charging 16 percent, 18 percent, and 20 percent interest. Complete the following chart. Since the average daily balance is the most commonly used balance calculation method, is shopping for a lower interest rate really that important? 16% 18% 20% Average Daily Balance $6.33 Previous Balance $13.44 Adjusted Balance $1.37 The three primary methods used to determine interest charges on unpaid credit balances are (1) the average daily balance method, (2) the previous balance method, and (3) the adjusted balance method. The monthly interest charges can be compared using the following table: 18% 20% 16% $6.33 Average Daily Balance Previous Balance Adjusted Balance $13.44 $1.37 The amount Melita will pay in monthly interest charges based on the $ 475 average daily balance for the credit card account charging an annual rate of 18 percent is $ (Round to the nearest cent.) The amount Melita will pay in monthly interest charges based on the $ 475 average daily balance for the credit card account charging an annual rate of 20 percent is $ (Round to the nearest cent.) The amount Melita will pay in monthly interest charges based on the $ 896 previous balance for the credit card account charging an annual rate of 16 percent is $ (Round to the nearest cent.) The amount Melita will pay in monthly interest charges based on the $ 896 previous balance for the credit card account charging an annual rate of 20 percent is $ (Round to the nearest cent.) The amount Melita will pay in monthly interest charges based on the $ 82 adjusted balance for the credit card account charging an annual rate of 16 percent is $ (Round to the nearest cent.) The amount Melita will pay in monthly interest charges based on the $ 82 adjusted balance for the credit card account charging an annual rate of 18 percent is $ (Round to the nearest cent.) Since the average daily balance is the most commonly used balance calculation method, is shopping for a lower interest rate really that important? (Select the best answer below.) O A. Shopping for a lower interest rate is not important because the adjusted balance method will always result in lower monthly interest charges. It is more important to find a credit card that uses the adjusted balance method than to shop for a lower interest rate. OB. Shopping for a lower interest rate important because it results in lower monthly interest charges for all three methods for calculating interest payments
