Question

Here is Sam's credit card statement for the month of November. Date Transaction November 1 Beginning balance November 16 Payment November 23 Purchase November 25 Payment Transaction amount $ 1600.08 S620.00 $56.45 $100.00 (a) Use the credit card statement to help fill in the table below. Note that there are 30 days in November. Also, a purchase increases the unpaid balance, and a payment decreases the unpaid balance. Date Transaction November 1 Beginning balance November 16 Payment November 23 Purchase November 25 Payment Transaction Unpaid amount balance Number of days at that balance $1600.08 $1600.08 15 days (from November 1 through November 15) S620.00 $980.08 days (from November 16 through November 22) $56.45 s. 2 days (from November 23 through November 24) $100.00 s6 days (from November 25 through November 30) Total: 30 days Unpaid Number balance of days $24,001.20 $ $ $ Total: $0 x $

(b)Find the average daily balance. Write your answer to the nearest cent.
(c)Suppose the credit card company charges an interest rate of 1.3% on the average daily balance for November found in part (b). How much interest will be charged? Write your answer to the nearest cent.
(d)What will Sam's beginning balance be for the month of December (including the interest for November found in part (c))?

Answer 1

Solution:

(a) Table

Date Transaction Nov-01 Begiming balance Nov-16 Payment Nov-23 Purchase Nov-25 Payment Transaction Unpaid Number of days at that balance amount balance $ 1,600.08 $1,600.08 15 days (from November 1 through November 15) $ 620.00 $ 980.08 7 days (from November 16 through November 22) $ 56.45 $1,036.53 2 days (from November 23 through November 24) $ 100.00 $ 936.53 2 days (from November 25 through November 30) Total: 30 days Unpaid balance x Number of days $ 24,001.20 $ 6,860.56 $ 2,073.06 $ 1,873.06 $ 34,807.88

(b) Average Daily Balance

Average da ily ba lance a. Total unpaid balnce x Number $ 34,807.88 of days b. Total days 30 Average daily $ 1,160.26 balance (a/b)

(c) Interest on the average daily balance

Date Transaction Nov-01 Begimming balance Nov-16 Payment Nov-23 Purchase Nov-25 Payment Average daily Number of Interest @ Interest base balance days 1.3% $ 1,160.26 15 $ 17,403.94 $ 226.25 $ 1,160.26 70 $ 8,121.84 $ 105.58 $ 1,160.26 2 $ 2,320.53 $ 30.17 $ 1,160.26 2 $ 2,320.53 $ 30.17 Totals 30 days $ 392.17

(d) Beginning balance for the month of December

Date Transaction Nov-01 Beginning balance Nov-16 Payment Nov-23 Purchase Nov-25 Payment Nov-30 Ending balance Beginning Interest @ Ending Payment Purchase balance 1.3% balance $ 1,600.08 $ 226.25$ $ $ 1,826.33 $ 1,826.33 $ 105.58$ 620.00 $ 1,311.92 $ 1,311.92 $ 30.17 $ 56.45 $ 1,398.53 $ 1,398.53 $ 30.17 $ 100.00 $ $ 1,328.70 $ 1,328.70 $ $ $ 1,328.70 Beginning balance for the month of December $ 1,328.70