Estimate the answer by picking the best choice without calculating. If your credit card balance is $962, you make a $50 payment, the APR is 6%, and the interest is calculated according to the previous balance method, then the finance charge is __________.
A) $57.72
B) $4.81
C) $4.58
D) $4.56
E) $54.72

Question

Quizplus · Accepted Answer

The finance charge for one month can be estimated by taking the APR (6%) and dividing it by 12 (to get a monthly rate), then applying it to the balance. 6% of $962 is approximately $57.72 annually, or about $4.81 monthly. Choices A and E are too high for a single month's finance charge, and choices C and D are slightly off due to rounding or calculation differences.

Estimate the Answer by Picking the Best Choice Without Calculating