Using the previous balance method, compute the monthly rate and finance
charge.
previous balance apr monthly rate finance charge
$530.50 18% 1. 2.
$380.60 22% 3. 4.
$335.90 12.2% 5. 6.
b. compute the average daily balance and finance charge. as of april 1, the
credit card balance shows a previous balance of $808.05. a payment of $100
was made on april 10. a purchase of $80 was made on april 15. finance
charges are computed at 2% per month. this balance was in effect through the
billing date of may 1.
7. average daily balance 8. finance charge
c. compute the finance charge and new balance on each card balance below.
the finance charge is based on the previous balance before payment or credits
are deducted. the monthly rate is 1.5% on amounts up to $1000 and 1% on
amounts over $1,000.
previous
balance
finance charge payment credits purchases new balance
$868.50 9. $240.50 $0.00 $69.40 10.
$1,6544.20 11. $435.00 $132.70 $330.84 12.
$1,956.25 13. $480.40 $0.00 $347.62 14.
$950.30 15. $124.50 $0.00 $87.65 16.
$1,137.90 17. $432.60 $14.23 $0.00 18.
d. younkers charges 1.83% per month on the previous balances of its
accounts. juan coulter’s account shows a beginning balance of $974.55.
what is the amount of juan’s finance charge? 19.
© council for economic education 2011 2
e. calculate the finance charge using the previous balance method.
previous balance apr monthly rate finance charge
$760.50 1.8% 20. 21.
$198.40 1.5% 22. 23.
$690.60 1.75% 24. 25.
f. compute the average daily balance and finance charge. as of april 1, the
credit card balance shows a previous balance of $600.00. a payment of $120
was made on april 10. a purchase of $175 was made on april 15. finance
charges are computed at 18% per year. this balance was in effect through the
billing date of may 1.
26. average daily balance 27. finance charge
28. new balance
g. use the following information to compute the new balance:
previous balance: $313.40
finance charge: 4.70
payments 113.40
credits 12.50
purchases 37.58
29. new balance
h. compute the finance charge and new balance on each card balance below.
the finance charge is based on the previous balance before payment or credits
are deducted. the monthly rate is 2% on amounts up to $1000 and 1% on
amounts over $1,000.
previous
balance
finance charge payment credits purchases new balance
$1,345.50 30. $260.50 $0.00 $289.50 31.
$1,846.19 32. $450.00 $22.70 $90.74 33.
$1,136.20 34. $575.40 $0.00 $147.60 35.
$1,873.30 36. $155.50 $0.00 $98.75 37.
$1,427.90 38. $354.60 $31.23 $87.00 39.
© council for economic education 2011 3
i. determine the annual or monthly rate. round to 2 decimal places.
annual percentage rate 18% 40. monthly rate
monthly rate 1.8% 41. yearly rate
using the previous balance method, calculate the finance charge and account
balance.
previous balance apr finance charge account balance
$542.18 18.5% 42. 43.
j. using the average daily balance method, determine the average daily
balance and finance charge for juanita coulter. juanita’s charge account
shows a balance of $225.50 on june 1. a payment of $155.50 was made on
june 10. purchase of $340 were made on june 20. an annual rate of 18.5%
is applied to the account. june has 30 days.
44. average daily balance
45. finance charge
k. solve the following problem using the adjusted balance method.
willie has a charge account at home depot with a current balance of $55.94.
the store charges 1.5% interest rate on the unpaid balance. if willie makes a
$15 payment and makes additional charges of $23, what is the amount of the
ending balance? what is the apr?
46. unpaid balance
47. apr
48. write a paragraph describing how the interest rate and time affect the