432 Chapter 10 Consumer Mathematics
- Rikki’s credit card bill is produced on the 19th of each month. On January 19 her balance was $454.02. She made
charges of: $175.96 on January 25, $34.44 on January 27, $303.12 on February 15, and $17.73 on February 18.
She made a payment of $454.02 on February 3. Her card carries a 17.99% interest rate. Find the total balance for her
February 19 bill. - Amos charges $95.09 to his credit card at a grocery store. The store pays a 1.5% commission on the purchase. How
much does the grocery store actually receive? - Michael’s credit card bill is produced on the 23rd of each month. On July 23 his balance was $775.19. He paid this
balance in full on August 14. Is he eligible to take advantage of the grace period for the billing period ending on
August 23? Why or why not? - A debit card charges a merchant 1.45% of the amount of each payment, subject to a minimum commission of $1.05.
Calculate the commission that would be paid on a purchase of (a) $25.13, (b) $52.47, (c) $82.02, (d) $179.33. - CC’s credit card billing period ends on the 20th of each month. On April 20 his balance was $500. He paid $200
on April 28, and made charges of $350 on April 30 and $675 on May 15. If his card carries a 23.99% interest rate,
calculate the interest he will owe on his May 20 statement. - Shinglehouse National Bank offers a credit card with no annual fee and a 12.99% interest rate. Eldred Mutual Savings
Bank offers a card with a $25 annual fee and a 15% interest rate. Under what circumstances would someone prefer the
card offered by Eldred Mutual?
G. Additional Exercises
- A credit card processor charges a fl orist a commission for credit card purchases of 1.6% or $1.75, whichever is larger.
Because the fl orist doesn’t want to have to pay $1.75 on a small amount, he decides to make a store policy that he will
only accept credit card payment for purchases on which the 1.6% commission is at least $1.75. What will he make the
minimum credit card purchase amount? Would doing this be a good business decision? - Neil is looking for a new credit card, and has shopped around for the best deal he can fi nd. He doesn’t like to carry
much cash or write checks, and so he plans to use this card as much as possible. He has narrowed his choices down to
four different cards, some of which offer a “reward”:
Issuer Rate Annual Fee RewardBank A 15% $29 1% cash back on all purchases
Bank B 18% None ½% cash back on all purchases
Bank C 9.99% None None
Bank D 12.9% $59 1 frequent fl ier mile for each dollar chargedSuppose that Neil expects that he will make purchases totaling $8,500 on the card over the course of the year.
a. Calculate the total rewards that Neil would receive over the course of the year with each of these cards.
b. Which card would be the best deal for Neil if he is a convenience user?
c. Which card would be the best deal for Neil if he carries an average balance of $1,250?
d. What if he carries an average balance of $5,000?