Answer Happy

This is a sample credit card statement. The statement includes
the balance that was due on the previous statement, and the amount
paid the previous month. Notice that we paid the
previous month’s balance in full. That started this month’s
statement balance at $0.
1. Write what we mean by a “grace period” for a credit card
statement below.
2. a. What is the minimum payment on this bill?
________________________
b. Assuming we pay the minimum payment, what will our balance be
for the next month’s statement? Remember that since we are
starting with a $0 balance for this month, we have a grace period
for payment and will not be charged interest.
c. What is the periodic interest rate per month?
______________________________
d. Calculate the amount of interest we will pay on the next
month’s bill.
e. Calculate the total amount that will be due on the next
month’s bill.
3. The Annual Percent Rate (APR) is defined as the periodic
interest rate for a loan multiplied by the number of payment
periods per year. Calculate the APR for this credit card.
4. The effective interest rate is the amount of interest
you will actually pay on a loan. This is calculated by (1 +
period interest rate)number of times interest is calculated per
year − 1, then multiply by 100 to get the percentage.
Calculate the effective interest rate for this credit card.
5. Count the above month as “month 1”. Assume we don’t use this
credit card for new purchases, and that we only pay the
minimum amount each month. How many months will it take for us to
pay off this credit card in full? (You will need to go through the
above process until you get a $0 for the amount owed.
ACCOUNT NUMBER 4125-239-412 CREDIT LINE $1200.00 REFERENCE 483GE7382 32F349ER3 89102DIS2 NX34FJD32 84RT3293A 973DWS321 Previous Balance Purchases Cash Advances Payments Credits FINANCE CHARGES Late Charges NEW BALANCE FINANCE CHARGE SUMMARY Periodic Rate Annual Percentage Rate SOLD 1/12 1/13 1/18 1/20 2/09 SEND PAYMENT TO Box 1244 Anytown, USA STATEMENT DATE PAYMENT DUE DATE 3/09/09 2/13/09 MINIMUM PAYMENT DUE NEW BALANCE $125.24 $20.00 ACTIVITY SINCE LAST STATEMENT AMOUNT PAYMENT THANK YOU -168.80 14.83 RECORD RECYCLER ANYTOWN, USA BEEFORAMA REST ANYTOWN, USA GREAT ESCAPES BIG CITY, USA 30.55 27.50 12.26 DINO-GEL GASOLINE ANYTOWN, USA SHIRTS 'N SUCH TINYVILLE, USA 40.10 Current Amount Due 125.24 Amount Past Due Amount Over Credit Line Minimum Payment Due 20.00 For Customer Service Call: 1-800-xxx-XXXX For Lost or Stolen Card, Call: 1-800-xxx-XXXX 24-Hour Telephone Numbers CREDIT CARD STATEMENT NAME John Doe CREDIT AVAILABLE $1074.76 POSTED 1/25 1/15 1/15 1/18 1/21 2/09 168.80 125.24 168.80 125.24 PURCHASES 1.65% 19.80% ADVANCES 0.54% 6.48%