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Parker has a credit card that has an APR of 21.99%. If Parker’s average daily balance for the month is $742, what is the finance charge? If Parker’s balance at the end of the month is $920, what will the new balance be after including the finance charge?



Answer :

The finance charge is $13.60, whereas the new balance at the end of the month is  $933.60

What is the finance charge on the credit card balance?

The finance charge which is the monthly interest payable on the credit card balance is based on the average daily balance for the month, it is determined as the  average daily balance for the month multiplied by the annual percentage rate(APR) divided by 12 , since the requirement is to compute one month finance charge and not for a whole year

finance charge=$742*21.99%/12

finance charge=$13.60

The new balance is the balance at the end of the month plus the finance charge

new balance=$920+$13.60

new balance=$933.60

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