b. On December? 1, instead of making his minimum? payment, the card holder makes
ID: 2657777 • Letter: B
Question
b. On December? 1, instead of making his minimum? payment, the card holder makes a payment of
?$100
Assuming there are no additional charges or cash? advances, determine the card? holder's minimum payment on January 1.
A credit card company determines a card holder's minimum monthly payment by adding all new interest to 1.5% of the outstanding principal. The credit card company charges an interest rate of 0.05845% per day. On Novermber 11, a customer used his credit card to pay for the following business expenses: van repairs ($953), equipment maintenance ($428), office supplies ($90), and dinner with clients ($112). Use the given information and the rule that minimum payments are rounded up to the nearest dollar to answer parts a and b below a. Assuming the card holder had no new interest, determine his minimum payment due on December 1, his billing date The card holder's minimum payment due on December 1 is sExplanation / Answer
Answer:
(a) $42
Explanation:
Total outstanding principal as on 11th November - ($953+$428+$90+$112) = $1583
Total days till the billing date i.e. 1st December - 20 days
Interest charged on the O/s principal for 20 days - $1583 X 20 days X 0.05845% = $18.50
Minimum due as on 1st December = 1.5% of O/s principal + Interest
= (1.5% X $1583) + $18.50 = $42
(b) $50
Explanation:
Total payment adjusted against interest = $18.50
Balance payment adjusted against O/s principal = $100 - $18.50 = $81.50
O/s principal as on 1st December = $1583 - $81.50 = $1501.50
Total days till the billing date i.e. 1st January - 31 days
Interest charged on the O/s principal for 31 days - $1501.50 X 31 days X 0.05845% = $27.20
Minimum due as on 1st January = 1.5% of O/s principal + Interest
= (1.5% X $1501.50) + $27.20 = $50
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