At the beginning of September a credit card has a balance of $400. The card has

Question

At the beginning of September a credit card has a balance of $400. The card has an annual interest rate of 21%, and during September the following adjustments were made on the account: 2. September 5: payment- $100 Sunglasses September 18: charge $70 Credit September 23: charge $48 Movie Tickets Use the average daily balance method to compute the finance charge that will appear on the next statement. Show all numbers that you used to make your calculations: Day Balance Number of days Balance Sum the third column Divide the sum by the number of days in the month: This will be your average daily balance: Use this number and put it into this I PRT formula to get the finance charge for the month Which method in this case is better for the person using the credit card? (Look at your answers to numbers 1 and 2 to answer this question)

Explanation / Answer

Day Balance No. of days*Balance Calculations & Explanation for your reference Days calulations 4 400 1600 =5-1 13 500 6500 Cumulative Blance =18-5 5 570 2850 Cumulative Blance =23-18 8 618 4944 Cumulative Blance =30-22   for balance days 15894 529.8 =15894/30 Interest = 9.27 I=PRT meants     Interest=Principal*rate*term =529.8*21/100*1/12     = 9.2715

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