Need help with math problem. Tom has an unpaid balance of $2,115.75 on his credit card statement at the beginning of June. He made a payment of $85.00 during the month. If the interest rate on Phil's credit card was 11% per month on the unpaid balance, find the finance charge and the new balance on July 1.
To find the finance charge and the new balance on July 1, we need to follow these steps:
Step 1: Calculate the finance charge.
The finance charge is the interest accrued on the unpaid balance. In this case, the interest rate is 11% per month.
First, convert the annual interest rate to a monthly rate:
Monthly interest rate = Annual interest rate / Number of months
Monthly interest rate = 11% / 12 = 0.11 / 12 = 0.0092
Next, calculate the finance charge:
Finance charge = Monthly interest rate * Unpaid balance
Finance charge = 0.0092 * $2,115.75 = $19.47 (rounded to the nearest cent)
So, the finance charge is $19.47.
Step 2: Calculate the new balance on July 1.
The new balance can be found by adding the previous unpaid balance, any additional charges or fees, and subtracting any payments made during the month.
New balance = Unpaid balance + Finance charge - Payment
New balance = $2,115.75 + $19.47 - $85.00 = $2,050.22
Therefore, the new balance on July 1 is $2,050.22.
To summarize:
- The finance charge is $19.47.
- The new balance on July 1 is $2,050.22.