Question

Using the unpaid balance method, find the current month's finance charge on a credit card account having the following transactions.   Last month's balance: $475   Last payment: $150   Annual Interest rate: 15%   Purchases:  $569   Returns: $201The finance charge is $ ___________(Round to the nearest cent.)Note: The unpaid balance method calculates the finance charge on a credit card loan by using the simple interest formula I=Prt.

Answer 1

First, we need to subtract the last payment from the last month's balance.

$\text{LMP}-LP=475-150=325$

Then, apply the interest:

$\text{AIR}=325\cdot0.15=48.75$