The quoted annual rate on your credit card is 18%, and there is a $50 annual fee. If your account balance for the monthly billing period is $1,000, what is your finance charge?

Question

Quizplus · Accepted Answer

The monthly finance charge is calculated by dividing the annual rate by 12 months. So, 18% annual rate becomes 1.5% per month. For a $1,000 balance, the finance charge is 1.5% of $1,000, which is $15. The $50 annual fee is not part of the monthly finance charge calculation.

The Quoted Annual Rate on Your Credit Card Is 18