Question 1115242: Hello! I'm a little stumped on this problem! Any help is greatly appreciated! Thank you so much for helping! So here's the problem:
For the regular plan, the minimum payment due is the greater of $10.00 or 5% of the new balance shown on your statement (rounded to the nearest $1.00) plus any unpaid late fees and returned check fees, and any amounts shown as past due on your statement.
If you make a purchase under a regular plan, no finance charges will be imposed in any billing period in which (i) there is no previous balance or (ii) payments received and credits issued by the payment due date, which is 25 days after the statement closing date shown on your last statement, equal or exceed the previous balance. If the new balance is not satisfied in full by the payment due date shown on your last statement, there will be a finance charge on each purchase from the date of purchase.
It's asking me this:
a) If the new balance in your account is $8 and you have $35 unpaid late fees, what is your minimum payment due?
b) Suppose you have a previous balance of $150 and you pay $200 one month after the statement closing date. Will you be assessed a finance charge?
c) In part b), if you make a purchase on the same day that you make the $200 payment, will a finance charge be assessed on that purchase?
Any help is greatly appreciated! Thank you so much!It really helps me!
Answer by Theo(13342)   (Show Source):
You can put this solution on YOUR website! answer to question a.
your new balance is 8 dollars and you have 35 dollars in unpaid late fees.
your minimum due should be 10 dollars plus 35 dollars = 45 dollars.
answer to question b.
you have a previous balance of 150 dollars.
you make a payment of 200 dollars one month after the statement closing date.
since the payment due date is 25 days after the statement closing date, your payment is late and you will be assessed a finance charge on the 150 dollars plus a late payment fee.
you would be assessed a finance charge on the 150 dollars whether you paid the current month bill by the payment due date or not since the 150 dollars was from the previous month and not the current month.
answer to question c.
since you made the purchase on the same day that you paid 200 dollars, you should not have a finance charge on that purchase, since it is in the current statement period and not on the previous statement period, and the payment due on that new purchase is not until the next payment due date.
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i'm not sure if this is an exercise, or a real world problem you have.
if it's a real world problem, then you should check with whoever is giving you the credit to see what their policy is .
finance charges are assessed on the amount in your account that has not been paid by the payment due date for the month in which the purchases were made.
as long as you make a minimum payment, you won't be charged a late payment fee.
that is why it's a good idea to set you account up so that you are on auto-pay for the minimum amount.
if you forget to make a payment, they get the minimum due and no late payment fee is assessed.
you can always pay more than the minimum manually if you desire, and you can always make a manual payment any time during the month.
here's a scenario that might help.
you have a previous balance of 1000 dollars.
previous balance means this amount is from purchases made in previous months that haven't been paid by the payment due date for the month in which they were made.
it's april.
you bought 100 dollars worth of purchases in april by the statement close date.
your bill for april will be 1000 dollars from the previous balance plus finance charge on the previous balance plus 100 dollars for purchases you made in april.
let's assume you're paying 1% per month finance charge.
your bill for april will be 1000 + 10 dollars finance charge plus 100 dollars for the purchases made in april, for a total bill of 1110 dollars.
you pay 200 dollars by the april statement payment due date.
this amount is taken off your remaining balance and you now have a previous balance of 1010 what will appear on your next month's bill.
you were not charged interest on your 100 dollar purchase yet.
it will become part of the previous month balance on the next month statement.
bottom line appears to be:
you will be charged a finance charge on the remaining balance from the previous month, because that amount hasn't been paid by the previous month payment due date.
you will not be charged a finance charge on the purchases made in the current billing cycle.
consider:
your bill was 1000 previous balance plus 10 dollars finance charge plus 100 dollars new purchase for a total of 1110 dollars.
if you paid the bill in full by the payment due date, then there was only the finance charge on the previous month's balance and no finance charge on the current month's new purchases.
this is what i think is, or should be, happening.
to be sure, you need to check with the bank that is issuing the credit card.
best strategy for most credit cards is to get on auto pay and make the minimum payment due automatic.
this way you will never get assessed a late payment fee, and, if you want to pay more, then make an additional manual payment.
most credit card companies allow, and prefer, for you to be on auto pay.
i hope this helps. i don't work for a bank, but i believe this is the way it works, logically at least.
your bill for the current month should not include financn charge for the purchases made during the current month, but will include finance charge for purchases made in previous monthly billing cycles that have not been paid yet.
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