Open Ended Installment Loans

• Be aware, this is an overview, you really need to read the details on YOUR credit card.
• Credit card interest rates are among the highest.
  • Pawn and payday loan
  • Credit Cards
  • Regular Loans
  • Mortgages
• The rules for credit cards are different.
  • The year is 365 days long.
  • For purchases there is a grace period between when the charge is made and the company begins charging interest.
  • There is no grace period for cash advances.
  • There is a minimal monthly payment which is the larger of
    • interest and fees plus 1% of the principal.
    • Some companies will round this up to the next dollar amount.
    • A company minimum ($20) or the outstanding balance.
  • Try problem 21 a page 642
• Interest is calculated in several ways, we will consider the least computational, the previous balance method
  • Each month the interest is calculated on the previous balance.
  • And the number of days in the month.
  • This gets added to the old balance to become the new balance.
• Try problem 21 b page 642
• Do number 25 page 643
• Do Number 27
• Do spread sheet example.