Question

Use the unpaid balance method to find the finance charge on the credit card account.

Last month's balance, the payment, the annual interest rate, and any other transactions are given.
Last month's balance: $410
Payment: $350
Annual interest rate: 18.6%
Bought plane ticket: $160
Bought luggage: $160
Paid hotel bill: $155
a) $6.16
b) $8.10
c) $34.61
d) $41.56

Answer 1

To find the finance charge on the credit card account using the unpaid balance method, start with the previous balance, subtract the payment, add any transactions, and calculate the finance charge based on the annual interest rate.

Step-by-step explanation:

To find the finance charge on the credit card account using the unpaid balance method, we need to consider the balance, payment, and any transactions made during the month.

1. Start with the last month's balance of $410.
2. Subtract the payment of $350 to get the remaining balance of $60.
3. Add any transactions made during the month. In this case, we have a plane ticket purchase of $160, a luggage purchase of $160, and a hotel bill payment of $155.
4. Finally, calculate the finance charge by multiplying the total balance by the annual interest rate and dividing by 12 months. In this case, the finance charge is ($60 + $160 + $160 + $155) * (18.6% / 12) = $8.10.

Therefore, the finance charge on the credit card account using the unpaid balance method is $8.10.