Objective The purpose of this activity is to identify the fees associated with credit and calculate the additional expen

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Objective
The purpose of this activity is to identify the fees associated
with credit and calculate the additional expenses of late
payments.
Directions
Read the disclosure statement carefully and answer the questions
below. You will need a calculator to complete the activity.
Furniture Store Credit Card Disclosure
Statement: On approved furniture store credit card
purchases—based on your credit worthiness, other terms may apply.
$2,399 minimum purchase required for this offer. Other finance
offers available with lower minimum payment requirements. The
purchase amount is divided into equal monthly payments for the
promotional period. An additional $37 will be added to the
following month’s payment when payment is received after the due
date. No finance charges for 24 months. 23.9% standard rate, APR.
The promotion is cancelled for accounts not current, and the
default rate of 25.9% and regular minimum monthly payments apply.
Minimum finance charge $2. Certain rules apply to the allocation of
payments and finance charges on your promotional purchase if you
make more than one purchase on your credit card. Call
1-800-123-4567 or review your cardholder agreement for information.
Sale items and clearance items excluded. Offer does not apply to
previous purchases and cannot be combined with other discounts.
8. Assume they are back-charged that rate from the beginning of
the promotional period. How much will they owe in finance charges
for the first year?
9. What is the minimum amount they would have saved if
they paid cash? (Hint, think about their original intended
purchase.)