Question

Naoko has these daily balances on his credit card for September's billing period. He paid his balance from the August billing in full.

2 days $99.78
15 days $315.64
11 days $515.64
2 days $580.32

a. His APR is 15.4%. How much is the finance charge on his September bill? Round to the nearest cent.

b. Does the credit card company need to calculate his average daily balance?

c. Naoko calculated his average daily balance to be $377.85. Is he correct?

If not, what was his average daily balance?

Answer 1

a.) $0

b.) Because Naoko paid his balance in full, there will be no finance charges. The average daily balance is used to calculate finance charges, so the average daily balance will not be needed.

c.) No; $392.23

d.) He only added the four given balances and divided by 4, instead of multiplying the balances by the number of days before adding and correctly dividing that sum by 3.