Question

In John​ Balfour's credit card account interest is charged on the average daily balance. The cycle...

In John​ Balfour's credit card account interest is charged on the average daily balance. The cycle begins on May​ 4, and the cycle ends on June 3. The beginning balance is \$ 287.54 . A payment of ​\$200 is posted on May 18. A charge of ​\$17.86 is posted on May 7. A charge of ​\$55.81 is posted on May 12. A charge of ​\$116.42 is posted on May 29. John is charged 1.46​% per period. What is the finance charge for the​ cycle?

There are total 31 days in the cycle. For each day the balance has been calculated by adding the charges for that day and subtracting the payments for that day from previous days balance. The average daily balance is the average of these daily balances. Assuming there are 12 periods in a year, APR = 12 * Interest/period.

Then Finance charges for the cycle = Average Daily Balance X APR X days in billing cycle / 365

Finance charge as calculated above comes to be 3.84 (rounded to 2 decimal places)

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