Amanda\'s credit card statement for the month of December is shown below. Date T

Question

Amanda's credit card statement for the month of December is shown below. Date Transaction Transaction amount Decermber ? December 7 December 14 Payment Beginning balance$2280.10 Purchase $700.50 $352.00 $840.46 Purchase (a) Find Amanda's average dalily balance during the month of December Note that there are 31 days in December. Write your answer to the nearest cent. b) Suppose the credit card company charges an interest rate of 1.6% on the average daily balance for December found in part (a). How much interest will be charged? Write your answer to the nearest cent. What will Amanda's beginning balance be for the month of January (including the interest for December found in part (b))7

Explanation / Answer

a) Average Daily Balance = 2280.10*6 + 2980.6*7 + 2628.6*6+ 3469.06*12 = 91945.12/31 = 2965.97

It is calculated by adding the daily balance ( even for the days on which the balance has not changed ) .

b) Interest charged for december = 2965.97 * 1.6%*31/365 = $4.03

c) Beginning balance for the month of Jan = 3469.06 +4.03 = $ 3473.09

Note: The balance of credit card increases on further purchases and decreases on payment.

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