Final answer:
The finance charge on the credit card account for November can be calculated using the unpaid balance method. Steps to calculate the finance charge involve determining the average daily balance, finding the unpaid balance at the end of each day, and multiplying the average daily balance by the monthly interest rate. Therefore, the finance charge for November is 137 * 1.8333% = $2.51.
Step-by-step explanation:
The finance charge on the credit card account for November can be calculated using the unpaid balance method. To calculate the finance charge, we need to determine the average daily balance for the month and then multiply it by the monthly interest rate. Here are the steps:
- Determine the number of days in the billing cycle (December 1 to November 30 = 30 days).
- Calculate the average daily balance by summing up the daily balances for each day in November and dividing by the number of days in the billing cycle.
- Find the unpaid balance at the end of each day by subtracting the payments and returns from the cumulative charges.
- Sum up the unpaid balances for each day and divide by the number of days in the billing cycle to get the average daily balance.
- Calculate the monthly interest rate by dividing the annual interest rate by 12.
- Finally, multiply the average daily balance by the monthly interest rate to find the finance charge for November.
In this case, the daily balances and unpaid balances are as follows:
- November 1: Daily Balance = $380, Unpaid Balance = $380
- November 8: Daily Balance = $433, Unpaid Balance = $433
- November 10: Daily Balance = $724, Unpaid Balance = $724
- November 13: Daily Balance = $1,758, Unpaid Balance = $1,758
- November 22: Daily Balance = $1,758, Unpaid Balance = $1,758
- November 28: Daily Balance = $57, Unpaid Balance = $57
- Total Unpaid Balance = $4,110
The average daily balance is $137 and the monthly interest rate is 22%/12 = 1.8333%. Therefore, the finance charge for November is 137 * 1.8333% = $2.51.