The credit card with the transactions described uses the average daily balance method to calculate interest. The monthly interest rate is 1.5% of the average daily balance. Calculate parts a-d using the statement.
| Transaction Description | Transaction Amount |
|---|---|
| Previous balance, $6330.00 | |
| March 1 Billing date | |
| March 5 Payment | $250.00 credit |
| March 7 Charge: Restaurant | $50.00 |
| March 12 Charge: Groceries | $80.00 |
| March 21 Charge: Car Repairs | $280.00 |
| March 31 End of billing period | |
| Payment Due Date: April 9 |
The interest to be paid on April 1 is $94.55 (Use the answer from part a to find this answer. Round to the nearest cent as needed.)
c. Find the balance due on April 1.
The balance due on April 1 is $ [] (Use the answer from part b to find this answer.)
Answer (1)
The previous balance is $6330.00 .
Subtract the payment of $250.00 .
Add the charges of $50.00 , $80.00 , and $280.00 .
Add the interest of $94.55 .
Calculate the balance due: $6330.00 − $250.00 + $50.00 + $80.00 + $280.00 + $94.55 = $6584.55 .
Explanation
Understanding the Problem We are given the previous balance, a payment, several charges, and the interest. We need to find the balance due on April 1. The balance due is calculated by taking the previous balance, subtracting the payment, adding the charges, and adding the interest.
Identifying Given Information The previous balance on March 1 is $6330.00 . A payment of $250.00 was made on March 5. Charges of $50.00 , $80.00 , and $280.00 were made on March 7, March 12, and March 21, respectively. The interest to be paid on April 1 is $94.55 .
Calculating the Balance Due To find the balance due on April 1, we use the following formula: Balance due = Previous balance − Payment + Charges + Interest Substituting the given values, we have: Balance due = $6330.00 − $250.00 + $50.00 + $80.00 + $280.00 + $94.55 Balance due = $6330.00 − $250.00 + $50.00 + $80.00 + $280.00 + $94.55 = $6584.55
Stating the Final Answer Therefore, the balance due on April 1 is $6584.55 .
Examples
Understanding credit card balances is essential for managing personal finances. Calculating the balance due helps consumers track their spending, avoid late fees, and make informed decisions about their credit usage. This problem demonstrates how daily transactions, payments, and interest rates affect the final balance, empowering individuals to maintain healthy financial habits and plan their budgets effectively. By understanding these calculations, people can better control their credit card debt and achieve their financial goals.
