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Author Question: Describe how to calculate the new balance on a credit card which uses the previous balance ... (Read 118 times)

pragya sharda

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on: Jun 24, 2018
Describe how to calculate the new balance on a credit card which uses the previous balance method.

Question 2

Describe how the average daily balance method calculates the finance charge for a billing period.


missalyssa26

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Reply #1 on: Jun 24, 2018
Answer to Question 1

New Balance = Previous Balance + (Finance Charge + New Purchases + Fees) - (Payments + Credits)

Answer to Question 2

The average daily balance is found by dividing the sum of the daily balances by the number of days in the billing period. The finance charge is then the average daily balance multiplied by the monthly periodic rate of the credit card.


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