Question

Use the unpaid balance method to find the finance charge on the credit card account for November (that will appear on

December bill). The balance at the beginning of the month is 380$. The annual interest rate is 22%. The billing date is
December 1st. The transactions on the account for the month are given below.
November 1
November 8
November 10
November 13
November 22
November 28
Finance charge for November
Charged $53
$24 return
Charged $305 (airplane tickets)
Charged $219 (shopping)
Payment $700
The finance charge added to November bill: $
The balance at the end of November: $
The finance charge for November (added to December bill): $
(Round the answers to nearest cent.)

Answer 1

Finance charge for November was $31.88, leaving a final balance of $244.88.

The finance charge for November is $31.88. The balance at the end of November is $244.88.

1. Start with the balance at the beginning of the month, $380.

2. Add up all the charges to the account during the month:

* November 1: $53

* November 13: $305

* November 22: $219

* Total charges: $577

3. Subtract any payments made during the month:

* November 28: $700

* Total payments: $700

4. Add the total charges and the beginning balance to get the total balance before finance charges: $380 + $577 - $700 = $257

5. Calculate the daily periodic rate by dividing the annual interest rate by the number of days in a billing cycle (assuming a 30-day cycle): 22% / 30 = 0.7333%

6. Calculate the finance charge by multiplying the daily periodic rate by the average daily balance: 0.7333% * $257 * 30 = $31.88 (round to the nearest cent)

Therefore, the finance charge for November that will appear on the December bill is $31.88, and the balance at the end of November is $257 + $31.88 = $288.88.