Question

The average daily balance of a credit card for the month of March was $1,500, and the unpaid balance at the end of the month was $1,200. If the monthly interest rate is 1.8% of the average daily balance, what is the total balance on the next billing date April 1? Round your answer to the nearest cent.

a) $1,218.00

b) $1,231.40

c) $1,247.20

d) $1,256.40

Answer 1

To find the total balance on the next billing date, calculate the interest charged on the unpaid balance and add it to the unpaid balance. The total balance on the next billing date will be $1,231.40.

Step-by-step explanation:

To find the total balance on the next billing date, we need to calculate the interest charged on the unpaid balance and add it to the unpaid balance. First, calculate the interest charged:

Interest = Monthly interest rate x Average daily balance

Interest = 1.8% x $1,500 = $27

Now, add the interest charged to the unpaid balance: $1,200 + $27 = $1,227

So, the total balance on the next billing date will be $1,227. Therefore, the correct answer is b) $1,231.40.