11 On the August 10th billing date Victor had a balance due

11) On the August 10th billing date, Victor had a balance due of $1400 on his credit card. The transactions during the following month were: August 15th Charge: tuition $1080 August 20th Charge: books $450 August 25th Payment $200 The interest rate on the card is 1.8% per month. Using the previous balance method, find the finance charge on September 10th. (4 points)

Solution

Using the previous balance method

Finance charge will be applied on the previous balance. Finance charge won\'t be affected towards the payment of next billing cycle.

Finance charge on September 10th = Previous balance x interest rate

= $1400 x 1.8/100

= $25.20