Nancy Tai has recently opened a revolving charge account with MasterCard. Her credit limit is $1000, but she has not charged that much since opening the account. Nancy hasn't had the time to review her monthly statements as promptly as she should, but over the upcoming weekend, she plans to catch up on her work.

In reviewing November's statement, she notices that her beginning balance was $600 and that she made a $200 payment on November 10. She also charged purchases of $80 on November 5, $100 on November 15, and $50 on November 30. She can't tell how much interest she paid in November because she spilled watercolor paint on that portion of the statement. She does remember, though, seeing the letters APR and the number 16%. Also, the back of her statement indicates that interest was charged using the average daily balance method including current purchases, which considers the day of a charge or credit.

Assuming a 30-day period in November, calculate November's interest. Also, calculate the interest Nancy would have paid with: a) the previous balance method, b) the adjusted balance method.
Going back in time, when Nancy was just about to open her account, and assuming she could choose among credit sources that offered different monthly balance determinations, and assuming further that Nancy would increase her outstanding balance over time, which credit source would you recommend?

To calculate the interest Nancy paid in November, we first need to determine the average daily balance for the month.

Here's how to calculate it using the average daily balance method:

1. Determine the number of days for each balance amount:

- November 1-4: $600 (4 days)
- November 5-9: $680 = $600 (beginning balance) + $80 (charge) (5 days)
- November 10-14: $480 = $680 - $200 (payment) (5 days)
- November 15-29: $580 = $480 + $100 (charge) (15 days)
- November 30: $630 = $580 + $50 (charge) (1 day)

2. Calculate the products of each daily balance amount by the number of days:

- ($600 x 4) + ($680 x 5) + ($480 x 5) + ($580 x 15) + ($630 x 1) = $9,960

3. Divide the total by the number of days in the month:

- $9,960 / 30 = $332

So, Nancy's average daily balance for November is $332.

To calculate the interest using the average daily balance method, we can multiply the average daily balance by the daily interest rate. The daily interest rate is calculated by dividing the annual percentage rate (APR) by 365 (or the number of days in a year). In this case, the APR is 16%, so the daily interest rate would be 16% / 365 = 0.044%.

To calculate the interest for November:

- $332 x 0.00044 x 30 = $4.63

Therefore, Nancy paid approximately $4.63 in interest for November using the average daily balance method.

Now, let's calculate the interest using the previous balance method:

The previous balance method only considers the balance at the end of the previous billing period. In this case, the previous balance is $600. The interest rate and number of days remain the same as before.

- $600 x 0.00044 x 30 = $7.92

Therefore, Nancy would have paid approximately $7.92 in interest for November using the previous balance method.

Finally, let's calculate the interest using the adjusted balance method:

The adjusted balance method subtracts any payments or credits made during the billing period from the previous balance. So, in this case, we subtract the $200 payment made on November 10 from the previous balance of $600.

- ($600 - $200) x 0.00044 x 30 = $6.72

Therefore, Nancy would have paid approximately $6.72 in interest for November using the adjusted balance method.

If Nancy had the choice among credit sources that offered different monthly balance determinations, it would depend on her specific financial situation and preferences. However, generally speaking, the average daily balance method is generally more favorable for credit card holders because it takes into account the timing of charges and payments, resulting in potentially lower interest charges compared to the previous balance or adjusted balance methods.