Question

Arnold Brown has a Visa card with an annual percentage rate of 18.0%. the unpaid balance for his June billing cycle is $1,381.16. during the billing cycle he purchased a printer cartridge for $45.25, books for $213.88, and gasoline for $17.82. he made a payment of $1,100. if the account applies the unpaid balance method, what are the finance charge and the new balance?

Answer 1

First, let's calculate the unpaid balance for the cycle:

$\begin{gathered} U=1381.16-1100 \\ U=281.16 \end{gathered}$

Now, let's calculate the finance charge. First, let's convert the annual rate into a monthly rate:

$\frac{0.18}{12}=0.015$

We get that the monthly rate is 1.5%

This way the finance charge is:

$\begin{gathered} F=281.16\cdot0.015 \\ F=4.22 \end{gathered}$

Now, let's calculate the New Balance:

$\begin{gathered} N=281.16+4.22+45.25+213.88+17.82 \\ N=562.33 \end{gathered}$

This way:

Finance charge: $4.22

New balance: $562.33