Jerrod Dean starts the month with a balance on his credit card of $800.On the 10th day of the month,he purchases $200 in clothes with his credit card.On the 15th day of the month he makes a payment on his credit card of $300.The bank charges 1.5 percent interest per month using the adjusted balance method (and excludes new purchases).What would Jerrod's finance charges be for the month?

Question

Quizplus · Accepted Answer

The adjusted balance method calculates interest on the balance at the end of the billing cycle after payments and credits are subtracted, but before new purchases are added. Jerrod's balance was $800, he then made a payment of $300, reducing his balance to $500. The $200 purchase is not included in this calculation. The interest for the month is 1.5% of $500, which is $7.50.

Jerrod Dean Starts the Month with a Balance on His