Question
On November 1, Erics credit card has a balance of $4,501.00. According to the terms of the cards lending agreement, an interest rate of 18%
On November 1, Erics credit card has a balance of $4,501.00. According to the terms of the cards lending agreement, an interest rate of 18% per year is assessed and the monthly finance charges are calculated using the Average Daily Balance (ADB) including purchases method.
During the month, Eric expects to make the purchases listed below and will make a payment of $337.58 on November 25, and has collected the following additional information:
Date | Purchases |
---|---|
November 5 | $1,835.95 |
November 15 | 55.6 |
November 19 | 63.1 |
November 27 | 447.77 |
Additional Information
Monthly interest rate | 1.50% |
Beginning card balance | $4,501.00 |
Days in the month | 30 |
Use the following table to help Eric estimate his monthly interest charge for November.
Dates | Number of Days | Daily Balance | Calculated Value |
---|---|---|---|
11/2 - 11/5 | 4 | $4,501.00 |
|
11/6 - 11/15 | 10 |
|
|
11/16 - 11/19 | 4 |
|
|
11/20 - 11/25 | 6 |
|
|
11/26 - 11/27 | 2 |
|
|
11/28 - 11/1 | 4 |
|
|
Total | 30 |
| |
Average Daily Balance With Purchases |
| ||
Finance Charge |
|
One way by which Eric can reduce his finance charges, everything else remaining constant, is to:
Request a lower interest rate on his credit card.
Make more, even more expensive purchases.
Make smaller payments.
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