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Gloria's credit card charges an annual interest rate of 18.5% (0.05068% per day),...

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suzannat | eNotes Newbie

Posted June 15, 2013 at 5:09 AM via web

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Gloria's credit card charges an annual interest rate of 18.5% (0.05068% per day), compounded daily, on any outstanding balance. Her current outstanding balance is $2830.58. There is a minimum payment of $50.00 or 3% of balance, whichever is larger. Her due date is March 8th. Calculate her balance on April 8th, assuming she makes no more purchases with her credit card.

Calculate minimum payment.
Calculating outstanding payment.
Calculate balance on April 8th.
Show your work.

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justaguide | College Teacher | (Level 2) Distinguished Educator

Posted June 15, 2013 at 5:40 AM (Answer #1)

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Gloria's credit card charges an annual interest rate of 18.5% (0.05068% per day), compounded daily, on any outstanding balance. Her current outstanding balance is $2830.58. The minimum payment is either of $50.00 or 3% of balance, whichever is larger.

As her current outstanding balance is $2830.58, the minimum payment due is $85.52. This leaves an outstanding amount of $2765.06

If the complete payment is made on March 8th, the balance due on April 8th would be 0.

Else, if only the minimum amount is paid and the credit card company charges interest only on the amount outstanding, the balance on April 8th would be 2765.06*(1+ 0.0005068)^31 = $2808.83.

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