Question

Antonio's credit card has an APR of 16. 65%, and it calculates his finance charge by using the daily balance method and a 30-day billing cycle. On June 1st, Antonio had a balance of $811. 67. During the month of June, he made a payment of $110. 16 and a purchase of $84. 4. How much greater will his June finance charge be if the purchase occurred on June 5th and the payment occurred on June 23rd than it would be if the payment occurred on June 5th and the purchase occurred on June 23rd? a. $0. 44 b. $1. 59 c. $4. 96 d. $0. 36.

Answer 1

The finance charge Antonio's credit card which has APR of 16. 65%, with daily balance method is $0.36.

What is daily balance method ?

The daily balance method is the mathematical way to calculate the interest charge uses each day of billing period.

Antonio's credit card has an APR of 16. 65%, and it calculates his finance charge by using the daily balance method and a 30-day billing cycle.

On June 1st,  Antonio had a balance of $811. 67. During the month of June, he made a payment of $110. 16 and a purchase of $84.4.

• The purchase occurred on June 5th and the payment occurred on June 23rd than it would be if
• The payment occurred on June 5th and the purchase occurred on June 23rd.

                                             Transaction    Date

• Opening Balance         $811.67          June 1st
• Purchase                       $110.16          June 5th
• Payment                         $84.4           June 23rd

The average daily balance is,

$A=\dfrac{(811.67\times5)+[(811.67-110.16)18]+[(811.67-110.16+84.4)7]}{30}\\A=\dfrac{(4058.35)+(12627.18)+(5501.37)}{30}\\A=\dfrac{22186.9}{30}A=739.56$

Antonio's credit card has an APR of 16. 65%. Thus, the finance charge can be calculated as,

$\rm FC=\dfrac{739.56\times16.65}{365\times100}\\FC\approx0.36$

Hence, the finance charge Antonio's credit card which has APR of 16. 65%, with daily balance method is $0.36.

Learn more about daily balance method here;

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