The Mathematics of Money

428 Chapter 10 Consumer Mathematics

on a large balance in order to earn a half-penny back on each dollar spent might be better off

giving up the “reward” and getting lower fees and/or interest. Where rewards are offered,

you have to be careful to be realistic about their value, and just how much that reward might

actually cost in fees and interest. Some of the Additional Exercises will illustrate this.

EXERCISES 10.1

A. Average Daily Balance

1. A credit card’s billing period begins on the 12th day of each month. The activity on the card for the billing period
   beginning April 12 is summarized in the table below. Fill in the missing table components to calculate the ADB for this
   billing period.

Effective Date Activity Balance Days at Balance (Balance)(Days)

April 12 Start $1,755.28

April 14 Charged $128.53

April 29 Paid $500.00

May 7 Charged $62.45

May 9 Charged $197.65

TOTALS:

ADB

TOTAL (Balance)(Days)

_____________________

TOTAL Days

2. Jacinthe has a Visa credit card whose billing period begins on the third day of each month. On March 3 her balance
   was $707.45. She made a payment of $350.00 on March 19. She made charges of $105.00 on March 8, $75.00
   on March 18, and $206.95 on April 2. Make a table similar to the one given in Exercise 1 to list out her monthly card
   balance, then use it to fi nd her average daily balance for this billing period.


3. The billing period for Daeshawn’s MasterCard begins on the 27th of each month. On November 27 his balance was
   $455.25. He made charges of $75.05 on November 29, $92.07 on December 11, $177.42 on December 12, and
   $875.50 on December 24. He paid $375.00 on December 9. Organize this information in a table, and then use it to
   fi nd his average daily balance for this billing period.


4. Erik’s credit card billing period begins on the fi rst day of each month. On January 1 his balance was $4,039.88.
   He charged $303.75 on January 9, $611.05 on January 16, and made charges of $75.59 and $108.92 both on
   January 28. He paid $100 on January 17. What was his average daily balance for this billing period?

B. Calculating Credit Card Interest

5. Find the interest due for the credit card from Exercise 1 if the interest rate is 18.99%.


6. Find the interest Jacinthe will owe for the billing period in Exercise 2, assuming her interest rate is 21.99%.