Question

Unexpected expenses have come up, and you want a cash advance on your credit card (which comes with a transaction fee of 2.5%). The limit on your credit card is $7,500, and you already have a balance of $2,200. What is your available credit? How much will you owe as a transaction fee if you want a cash advance on your available credit??

Please answer correctly and explain your answer…

Answer 1

To calculate your available credit, you need to subtract your current balance and the amount of cash advance you want from your credit limit:

Available credit = credit limit - current balance - cash advance amount

Given that your credit limit is $7,500 and your current balance is $2,200, the available credit can be calculated as follows:

Available credit = $7,500 - $2,200 - cash advance amount

Now, if you want a cash advance of $1,000, for example, your available credit will be:

Available credit = $7,500 - $2,200 - $1,000 = $4,300

Therefore, your available credit is $4,300 if you want a cash advance of $1,000.

To calculate the transaction fee, you need to multiply the cash advance amount by the transaction fee percentage. In this case, the transaction fee is 2.5%. So, if you want a cash advance of $1,000, the transaction fee will be:

Transaction fee = $1,000 x 0.025 = $25

Therefore, if you want a cash advance of $1,000, you will owe a transaction fee of $25. It's important to note that cash advances usually come with a higher interest rate than regular credit card purchases, so it's best to use them only when absolutely necessary and pay them off as soon as possible to avoid accruing interest charges.