# CREDIT CARDS by xumiaomaio

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• pg 1
CREDIT CARDS

7.2 Unpaid balance method for
finance charge
Credit card: 7.2 Unpaid balance
method for finance charge          2/10

 Credit is NOT free
 When you do NOT pay off your entire
balance, the company charges you a
finance charge
 Based on your APR (annual percentage
rate)
 Different ways to compute finance
charges
Credit card: 7.2 Unpaid balance
method for finance charge                                      3/10

   Unpaid balance = Previous balance – (Payments + Credits)

   Finance charge = Unpaid balance x Periodic Rate
   New balance = Unpaid balance + finance charge + new purchases

   Step 1: Find the unpaid balance

   Step 2: Find the finance charge

   Step 3: Find the new balance
Credit card: 7.2 Unpaid balance
method for finance charge                4/10

   Ex. 1: Alicia has a charge account at
Soccer’s R Us. The periodic rate is
1.8%. If her previous balance is \$475.00,
she had payments and credits of
\$200.00 and she has a new purchase of
\$40.11, find the new balance.
Credit card: 7.2 Unpaid balance
method for finance charge                     5/10

 Ex. 1 cont.
1. Find the unpaid balance
Previous Balance – (Payments + Credits)
\$475.00         - ( 200.00) = 275.00
2. Find the finance charge
Unpaid Balance x Periodic rate
275.00 x 0.018         = \$4.95
3. Find the new balance
Unpaid Balance + Finance Charge + New Purchases
275.00 + 4.95 + 40.11 = \$320.06
Credit card: 7.2 Unpaid balance
method for finance charge               6/10

   Ex. 2: Cody has a previous balance of
\$1282.50. He made a payment of
\$175.00 and has a credit of \$52.38. He
makes new purchases of \$62.75 and
\$13.65. Find his new balance if the
periodic rate is 1.2%
Credit card: 7.2 Unpaid balance
method for finance charge                     7/10

  Ex. 2 cont.
1. Find the unpaid balance
Previous Balance – (Payments + Credits)
1282.50 - ( 175.00 + 52.38) =
1282.50 – 227.38              = \$1055.12
2. Find the finance charge
Unpaid Balance x Periodic Rate
1055.12 x 0.012 = \$12.66144
3. Find the new balance
Unpaid Balance + Finance Charge + New Purchases
1055.12 + 12.66 + ( 62.75 + 13.65) = \$1144.18
Credit card: 7.2 Unpaid balance
method for finance charge                    8/10

   Ex. 3: In groups find the new balance. Show

 Shannon’s account statement has a previous
balance of \$623.72. She makes a payment of
\$20.00. She has new purchases of \$429.68,
\$411.96 and \$130.03. Her periodic rate is
1.75%. What is her new balance?
 \$1585.96
Credit card: 7.2 Unpaid balance
method for finance charge                     9/10

  Ex. 3 cont.
1. Find the unpaid balance
Previous balance – (Payments + Credits)
\$623.72 – (\$20.00) = \$603.72
2. Find the finance charge
Unpaid Balance x Periodic Rate
\$603.72 x 0.0175 = \$10.5651
3. Find the new balance
Unpaid balance + Finance Charge + New purchases
603.72 + 10.57 + (429.68 + 411.96 + 130.03) =
\$1585.96
Credit card: 7.2 Unpaid balance
method for finance charge           10/10

 HW 7.2 p. 262-263 # 1-5 & 13-18
 Make sure you have ALL parts for HW:
a,b,c