Imagine that you have the following credit card statement for the period ending 9-25-20. You credit card's APR is 24%.
Range Balance (purchases/payments #days
8/26 to 8/30 $3000 5
8/31 to 9/11 $3147.58 12
9/12 to 9/18 $3197.58 7
9/19 to 9/21 $3298.64 3
9/22 to 9/25 $3098.64 4
what is the average daily balance for 8/26 to 9/25 billing statements
What is the interest change on the 8/26 to 9/25 billing statement
What will be the new balance on the 9-35 billing statement
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Help me out, this is super confusing and I can't seem to figure it out.
To calculate the average daily balance for the 8/26 to 9/25 billing statement, we need to determine the average balance for each period and then divide by the number of days in the statement. Here's how you can calculate it:
1. Calculate the average balance for each period:
- For 8/26 to 8/30: $3000
- For 8/31 to 9/11: ($3147.58 + $3000) / 2 = $3073.79
- For 9/12 to 9/18: ($3197.58 + $3147.58) / 2 = $3172.58
- For 9/19 to 9/21: ($3298.64 + $3197.58) / 2 = $3248.11
- For 9/22 to 9/25: ($3098.64 + $3298.64) / 2 = $3198.64
2. Calculate the total balance by adding up the average balances for each period:
$3000 + $3073.79 + $3172.58 + $3248.11 + $3198.64 = $15693.12
3. Calculate the number of days in the statement period:
5 + 12 + 7 + 3 + 4 = 31 days
4. Calculate the average daily balance by dividing the total balance by the number of days:
$15693.12 / 31 = $506.55
The average daily balance for the 8/26 to 9/25 billing statement is $506.55.
Now let's move on to calculate the interest charge on the 8/26 to 9/25 billing statement:
1. Determine the average daily balance (which we already calculated): $506.55
2. Calculate the Average Daily Balance (ADB) multiplied by the APR divided by 365 days:
$506.55 * 0.24 / 365 = $0.3319 (round to 4 decimal places)
3. Calculate the Interest Charge by multiplying the result from step 2 by the number of days in the billing period (31 days):
$0.3319 * 31 = $10.27 (round to 2 decimal places)
The interest charge on the 8/26 to 9/25 billing statement is $10.27.
Finally, to calculate the new balance on the 9/25 billing statement, you need to add the interest charge to the ending balance of the previous statement:
Ending balance on the 9/25 statement = $3098.64 (from the previous statement)
Interest charge = $10.27 (calculated above)
New balance = $3098.64 + $10.27 = $3108.91
So, the new balance on the 9/25 billing statement would be $3108.91.