Question

On October 22, you plan to purchase a $3,000 computer by using one of your two credit cards. The silver charges 18% interest and calculates interest based on the balance on the first day of the previous month, The Golf Card charges 18% interest and calculates interest based on the average daily balance. Both cards have $0 balance as of October 1. The closing date is the end of the month for each card. Your plan is to make a $1,000 payment in November, make a $1,000 payment in December and pay off the remaining balance in January. All your payments will be received and posted on the 10th of each month. No other charges will be made on the account. Based on this information, calculate the interest charged by the Silver card for this purchase and which card is the better deal?

Answer 1

Silver card			Golf card
	Interest					Interest
October	0		Product for October
			=3000*10		30000
			Divide above by 31 days		967.74
			Interest on above		@18%	14.52
November	45		Product for Novemebr
=3000*18%*/12			=3000*10		30000
			=2000*20		40000
			Total Product		70000
			Divide above by 30 days		2333.33
			Interest on above		@18%	35.00
December			Product for December
=2000*18%/12	30		=2000*10		20000
			=1000*20		20000
			Total Product		40000
			Divide above by 31 days		1290.32
			Interest on above		@18%	19.35
January			Product for January
=1000*18%/12	15		=1000*10		20000
			Total Product		20000
			Divide above by 31 days		645.16
			Interest on above		@18%	9.68
Total Interest	90			Total Interest		78.55
Conclusion : Since Interest for Golf card is less compared to Silver card, the Golf card is better deal.