- Credit cards.
- Interest rate is daily.
- 17.49% APR is the same as .1749/365 = .04792% daily
- If there is no previous balance, interest is not charged to new purchases.
- The minimum monthly payment Must reduce the amount you owe.
- Interest and finance charges + 1% of principle
- Payments are rounded up to the nearest dollar.
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Problem 21, page 689
The purchase was new, so no interest was charged the first month.
The minimum payment is .01x2600 = $26
The new balance is 2600- 500 = 2100
The interest is 2100x.00039698 x 30 = 25.01
+ 2100 x .01 = 21.00
-------
46.01
Which rounds up to $47
- When there is a previous balance, there are several ways to compute the interest due.
- The Unpaid Balance Method just calculates the interest based on the outstanding balance at the beginning of the period.
- Just to make the balance larger, the finance charge is added into the balance.
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Problem 25, page 690
The finance charge is
1,097.86 x .018x1 = 19.76
Calculate new balance
1,097.86 + 425.79 - 800 + 19.76 = 743.23
- Problem 27
The unpaid balance is 124.78
The interest is 124.78 x .0125 = 1.56
The new balance is
124.78 + 1.56 + 25.64 - 100 + 67.23 + 13.90 = 133.11