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In: Finance

On November 1st, Ava’s credit card has a balance of $4,501.00. According to the terms of...

On November 1st, Ava’s credit card has a balance of $4,501.00. According to the terms of the card’s lending agreement, an interest rate of 18% per year is assessed and the monthly finance charges are calculated using the Average Daily Balance (ADB) including purchases method.

During the month, Ava expects to make the purchases listed below and will make a payment of $337.58 on November 25thth, and has collected the following additional information:

Date

Purchases

November 5 $1,835.95
November 15 55.60
November 19 63.10
November 27 447.77

Additional Information

Monthly interest rate 1.50%
Beginning card balance $4,501.00
Days in the month 30

Use the following table to help Ava estimate her monthly interest charge for November.

Dates

Number of Days

Daily Balance

Calculated Value

11/ - 11/
11/ - 11/
11/ - 11/
11/ - 11/
11/ - 11/
11/ - 12/
Total
Average Daily Balance With Purchases
Finance Charge

One way by which Ava can reduce her finance charges, everything else remaining constant, is to:

Make more, even more expensive purchases

Make smaller payments

Request a lower interest rate on her credit card

Solutions

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