financial algebra © cengage/south-western slide 1 4-4 credit cards become familiar with the basic...
TRANSCRIPT
Financial Algebra© Cengage/South-Western Slide 11
4-4
CREDIT CARDS
Become familiar with the basic vocabulary of credit cards.
Compute an average daily balance.
OBJECTIVES
Financial Algebra© Cengage Learning/South-Western Slide 22
credit cardimpulse buying revolving charge
accountcharge cardTruth-in-Lending ActFair Credit Billing Act
Fair Debt Collection Practices Act
debit cardElectronic Funds
Transfer Actaverage daily balancemean
Key Terms
Financial Algebra© Cengage Learning/South-Western Slide 33
Example 1Example 1
Frank lost his credit card in a local mall. He notified his creditor before the card was used. However, later in the day, someone found the card and charged $700 worth of hockey equipment on it. How much is Frank responsible for paying?
Financial Algebra© Cengage Learning/South-Western Slide 44
Carrie’s credit card was stolen. She didn’t realize it for days, at which point she notified her creditor. During that time, someone charged $2,000. How much is Carrie responsible for paying?
CHECK YOUR UNDERSTANDING
Financial Algebra© Cengage Learning/South-Western Slide 55
Example 2Example 2
Credit card companies issue a monthly statement, therefore APR (annual percentage rate) must be converted to a monthly percentage rate. If the APR is 21.6%, what is the monthly interest rate?
Financial Algebra© Cengage Learning/South-Western Slide 66
If a monthly statement shows a monthly interest rate of x percent, express the APR algebraically.
CHECK YOUR UNDERSTANDING
Financial Algebra© Cengage Learning/South-Western Slide 77
EXAMPLE 3EXAMPLE 3
Rebecca did not pay last month’s credit card bill in full. Below is a list of Rebecca’s daily balances for her last billing cycle.
For seven days she owed $456.11. For three days she owed $1,177.60. For six days she owed $990.08. For nine days she owed $2,115.15. For five days show owed $2,309.13.
Find Rebecca’s average daily balance.
Financial Algebra© Cengage Learning/South-Western Slide 88
Last month, Paul had a daily balance of x dollars for 6 days, y dollars for 12 days, w dollars for q days, and d dollars for 2 days. Express the average daily balance algebraically.
CHECK YOUR UNDERSTANDING
Financial Algebra© Cengage Learning/South-Western Slide 99
EXAMPLE 4EXAMPLE 4
Rebecca (from Example 3) pays a finance charge on her average daily balance of $1,441.60. Her APR is 18%. What is her finance charge for this billing cycle?