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.)
$300 balance, 18% rate, $250 payment, previous balance method
Since the previous balance was not paid in full, 1.5% (1/12 of 18%) of the previous balance is owed as a finance charge. That would be $4.50.
The amunt of the payment doesn't matter when computing the finance charge, as long as it is less than the outstanding balance due and more than the minimum payment. Neither does the 10 day delay matter. Usually, payment must be received in less than 20 days, before the next bill goes out, or there is a whopping additional penalty charge.