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The following table shows the balance on a credit card over the period of 1 month that charges a 15.5% APR (interest rate).

\begin{tabular}{|c|c|c|}
\hline
Days & Balance & Description \\
\hline
[tex]$1-5$[/tex] & \[tex]$200 & Initial Balance \\
\hline
$[/tex]6-20[tex]$ & \$[/tex]350 & \[tex]$150 purchase \\
\hline
$[/tex]21-30[tex]$ & \$[/tex]150 & \[tex]$200 payment \\
\hline
\end{tabular}

What is the finance charge on the average daily balance for this card over this 1-month period?

Finance Charge $[/tex]=\[tex]$[?]$[/tex]


Sagot :

To determine the finance charge on the average daily balance for the credit card over the one-month period, follow these steps:

1. Calculate the total balance for each specified period:
- For days [tex]\(1-5\)[/tex]: The balance is [tex]$200. So, the total balance for these days is: \[ 200 \times 5 = 1000 \] - For days \(6-20\): The balance is $[/tex]350. So, the total balance for these days is:
[tex]\[ 350 \times 15 = 5250 \][/tex]
- For days [tex]\(21-30\)[/tex]: The balance is [tex]$150. So, the total balance for these days is: \[ 150 \times 10 = 1500 \] 2. Calculate the total balance over the entire period: \[ 1000 + 5250 + 1500 = 7750 \] 3. Calculate the average daily balance: \[ \frac{7750}{30} = 258.3333333333333 \] 4. Determine the Monthly Interest Rate: - The Annual Percentage Rate (APR) is 15.5%. To convert this to a monthly rate, divide by 12: \[ \frac{15.5\%}{12} = 0.0129166666666667 \] 5. Calculate the finance charge: \[ 258.3333333333333 \times 0.0129166666666667 = 3.3368055555555554 \] So, the finance charge on the average daily balance for this credit card over the one-month period is: \[ \text{Finance Charge} = \$[/tex]3.34
\]