Find the finance charge in the open end charge account. Assume interest calculated is on the unpaid balance of the account
Unpaid balance $611.80
Monthly interest rate 1.1%
is it compound interest?
To find the finance charge in an open end charge account, you need to calculate the interest on the unpaid balance of the account.
Step 1: Convert the monthly interest rate to a decimal
The monthly interest rate of 1.1% needs to be converted to decimal form. Divide it by 100 to convert it:
1.1% / 100 = 0.011
Step 2: Calculate the finance charge
Multiply the unpaid balance by the decimal form of the monthly interest rate to calculate the finance charge:
Finance charge = Unpaid balance * Monthly interest rate
Finance charge = $611.80 * 0.011
So, the finance charge in the open end charge account would be:
Finance charge = $6.73 (rounded to the nearest cent)
Therefore, the finance charge in the open end charge account is $6.73.