posted by MONICA on .
Calculate the monthly finance charge for the following credit card transaction. Assume that it takes 10 days for a payment to be received and recorded and that the month is 30 days long. (Round your answer to the nearest cent.) $500 balance, 20% rate, $50 payment, previous balance method
What are they asking you to calculate?
All you have said is the amount of the payment, the balance and interest rate, and that they use the previous balance method.
Well that is the question.I really do not know.
ok I came up with I=Prt =500(.20)(1/12)=$8.30 is this correct.
If what they want is the finance charge in the next billing cycle, that will be $450 * (0.20)/12 = $7.50
For the billing cycle of the current bill, the finance charge depends upon the previous unpaid balance. If that previous balance was $500, then your calculation is correct.