You had recently received your credit card statement and wish to be sure the finance charge for the billing cycle is correct. The statement indicated a beginning balance of $600. On day 5 a charge of $150 had posted to the account, on day 12 a charge of $300 posted to the account. On day 15 you had made a payment of $200. Use the below table to calculate the average daily balance and the finance charge, assuming the interest rate is 19.2%.
Transaction 
Days (ex. 16) 
Balance 
# of days 
Balance X # of Days 
$600 Beg. Balance 
600 

$150 charge 

$300 charge 

$200 payment 


 
30 
$ 
Average Daily Balance ____________________
Total Finance Charge (show calculation) ____________________
Transaction  days  balance  no. od days  no. of days ×balance 

beginning balance  day1 4  600  4  2400 
Charge of 150 on day 5  5  11  450  7  3150 
Charge of 300 on day 12  12  14  150  3  450 
Payment of 200 on day 15  15 30  350  16  5600 
30  11600 
Average daily balance =11600/30=386.66
Calculation of interest
Interest for a period= balance × outstanding period of balance/30 × periodic interest rate
Our annual interest rate is 19.2% assuming 360 working days in a year our periodic i.e. daily interest rate is .192/360
Interest :
For First 4 days = 600×4×.192/360=1.28
For next 7 days=450×7×.192/360=1.68
For next 3 days= 150 × 3 ×.192/360=.24
For last 16 days= 350×16×.192/360=2.99
Total=1.28+1.68+.24+2.99=6.19
Another way to calculate interest is
Total interest = average daily balance × monthly interest rate
=386.66×.192/12=6.19
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