Question

The credit card with the transactions described in the popup below uses the average daily balance method to calculate interest. The monthly interost rate is 1.6 % of the average daily balance. Calculate parts a d using the statement in the popup Cick the icon to view the credit card statement a. Find the average daily balance for the billing period Round to the nearest cont The average daly balance for the biling period is $ (Round to the nearest cont as noeded) b. Find the inerest to be paid on July 1, the next billing dale Round to the nearest cent The interest to be paid on July 1 is S (Use the answer from part a to find this answer. Round to the nearest cent as needed) c. Find the balance due on July 1

Answer 1

a. Calculation of Average daily balance:

Date		Description	Transaction amount	Balance	No.of days	Bal * No of days
			$	$		$
June	1	Billing date		2645.92	5	13229.6
June	6	Repayment	1,300.00	1345.92	2	2691.84
June	8		35.93	1,381.85	1	1381.85
June	9		136.68	1,518.53	8	12148.24
June	17	Gas	42.37	1,560.90
June	17	Groceries	126.47	1,687.37	10	16873.7
June	27	Clothing	215.12	1,902.49	4	7609.96
June	30	End of billing period	-
						53935.19
				No.of days		30
			Average daily balance			1,798

Average daily balance ( round off ) $1798

b. Interest Chargeable:

Rate of interest 1.6% - Monthly. Average daily balance $1798

Interest = 1798*1.6% = $29 ( Round off )

c. Due on billing date July 01:

Date		Description	Transaction amount	Balance
			$	$
June	1	Billing date		2,645.92
June	6	Repayment	1,300.00	1,345.92
June	8		35.93	1,381.85
June	9		136.68	1,518.53
June	17	Gas	42.37	1,560.90
June	17	Groceries	126.47	1,687.37
June	27	Clothing	215.12	1,902.49
June	30	Interest ( as per part b)	29.00	1,931.49

Due on July 01 is $ 1931.49

d. Minimum payment due:

Credit card requires a minimum payment of $30 in case the due amount is less than $400. In this case the due amount is $1931.49 hence the minimum due is calculated as 1/25th of the total due.

Minimum due = 1931.49 / 25 = $77 ( round off to nearest dollor ).