A credit card charges 18 percent annual interest and you have a balance due on the statement date of $750. You are able to make only the minimum payment of $18. What will be the interest charge for the next 30 days assuming the credit card uses the previous balance method?

Question

Quizplus · Accepted Answer

According to the previous balance method, the interest charge will be based on the balance due on the statement date, which is $750.

To calculate the interest for the next 30 days, we need to divide the annual interest rate by 365 (the number of days in a year) to get the daily interest rate.

Daily interest rate = 18% / 365 = 0.0493%

Then, we multiply the daily interest rate by the number of days in the billing cycle (30) and the previous balance ($750) to get the interest charge:

Interest charge = 0.0493% * 30 * $750 = $10.83

Therefore, the best choice is C.

A Credit Card Charges 18 Percent Annual Interest and You