Question

Your bankcard has an APR of 9% and there is a 2% fee for cash advances. The bank starts charging you interest on cash advances immediately. You get a cash advance of $2,200 on the first day of the month. You get your credit card bill at the end of the month. What is the total finance charge you will pay on this cash advance for the month? (Hint: Use the simple interest method plus the cash advance fee.) (Round your answer to 2 decimal places.)

Answer 1

The total finance charge you will pay on this cash advance for the month is $60.50.

Explanation:

Your bankcard has an APR of 9%.

So, monthly rate =
`(9)/(12)` = 0.75%

p = 2200

Simple interest =
`2200*0.007=16.50` dollars

There is a 2% fee for cash advances.

So, cash fee for $2200 is =
`0.02*2200=44` dollars

The total finance charge will be =
`16.50+44=60.50` dollars

Therefore, the total finance charge you will pay on this cash advance for the month is $60.50.