SOLUTION: Frank's credit card statement shows a balance of $638.19 on the first day of the billing cycle. If he makes a payment of $475 and charges $317 during this billing period, what wi

Algebra ->  Finance -> SOLUTION: Frank's credit card statement shows a balance of $638.19 on the first day of the billing cycle. If he makes a payment of $475 and charges $317 during this billing period, what wi      Log On


   

Question 121480: Frank's credit card statement shows a balance of $638.19 on the first day of the billing cycle. If he makes a payment of $475 and charges $317 during this billing period, what will his finance charge be, if the interest rate is 1.5% of the unpaid balance per month? What will be his beginning balance at the start of the next billing cycle?
Answer by Fombitz(32388) About Me  (Show Source):
You can put this solution on YOUR website!
Assuming that Frank only gets interest calculated on the last day of his billing period, then calculate how much he still owes on that day.
Ending Balance = Starting Balance - Payment + Charges
B%5Be%5D=683.19-475%2B317
B%5Be%5D=525.19
The interest, or finance charge, is then 1.5% of the Ending Balance.
I=525.19%281.5%2F100%29
highlight%28I=7.88%29
The balance at the beginning of the new billing period is the ending balance plus the finance charge.
B=B%5Be%5D%2BI
highlight%28B=533.07%29
Most credit cards companies use a daily balancing method, which allows them to collect interest on the higher balance until your payment is made.
Some even charge you interest for the billing period even if you pay the entire balance.
Remember to read the fine print.