For a person who sometimes pays his entire credit balance and sometimes pays the minimum payment,which calculation method would be the least expensive?

Question

Quizplus · Accepted Answer

Since the person sometimes pays the entire credit balance, choosing the calculation method that excludes new purchases (option B) would result in the lowest finance charge. This is because the average daily balance would not include any new purchases that accumulate interest from the time they are made until the balance is paid in full. Option D is also a valid choice, but it includes a two-cycle period which may not be necessary for this individual's payment habits. Option A includes new purchases in the calculation, which could increase the finance charge, and option C includes a two-cycle period which may not be necessary. Therefore, the best choice is B.

For a Person Who Sometimes Pays His Entire Credit Balance