Chpt 9.5 Introduction to Credit Cards, student name, hour



Chpt 9.5 Introduction to Credit CardsCredit cards are plastic cards issued by a bank or other business allowing the holder of the card to purchase goods and services without using cash, also called buying on credit.? They allow you to purchase things that you may not currently have the money to buy.? When you use a credit card, the credit company that issued the credit card pays the store.? Later, you will get a bill in the mail from your credit card company for the amount you purchased.? At that time, you can either pay the bill in full, or only pay a minimum amount, and wait till later to finish paying.? If you wait till later, you will owe the credit card company interest on the amount that you do not pay.Sarah's credit card company charges 13.2% a year interest, or 1.1% per month, for any unpaid amount.? For the month, Sarah purchased $504.00 worth of goods and services.? If each month Sarah does not pay the credit card bill in full, but instead just pays the monthly minimum charge of $56.00, finish filling in the following table to see how much money Sarah will end up paying.? Round each calculation to the nearest penny.??DatePrevious BalanceInterest ChargeBalance plus InterestYour PaymentRemaining BalanceJAN 1?$504.00?$5.54?$509.54?$56.00?$453.54??Feb 1453.54?4.99?458.53?56.00?402.53??Mar 1402.53?4.43?406.96?56.00?350.96??Apr 1350.96?3.86?354.82?56.00?298.82??May 1298.82?3.29?302.11?56.00?246.11??June 1246.11?2.71?248.82?56.00?192.82?Jul 1?192.82?2.12?194.94?56.00?138.94??Aug 1138.94?1.53?140.47?56.00?84.47??Sept 184.47?0.93?85.40?56.00?29.40??Oct 129.40?0.32?29.72?29.12?0.00???What was the total interest paid? $_________________How much did the item now cost by using the credit card? $__533.72_______________29.72SHOW WORK! Simple interest HYPERLINK "" FORMULA Principal x Rate X Time = Interest2) Barbara borrowed $2,300 to buy some furniture and is paying 15 percent interest a year for the loan. The terms of the loan do not require her to pay off any of the loan balance during the first year. She only has to make interest payments. How much interest will she pay the first year if she does not reduce the principal of the loan? Barbara will pay $2,300 x .15 = $345 in interest in the first year.3) Haran used his credit card –a form of short-term credit—to charge three tanks of gas this month. If his charges were $43.12, $51.87, and $38.35, how much should he pay at the end of this month?Haran should pay the bill in full: $43.12 + $51.87 + 38.35 = $133.344) Sabrina charged $800 at the local sporting goods store to buy some exercise equipment. The store offers no interest for 90 days if the balance is paid in full, or 24 percent annually if the balance is not paid in full prior to 90 days. How much interest will she need to pay if she lets the account go for 91 days before paying the bill?She will pay 2 percent--.02 a month, since the annual rate is 24 percent. At 91 days, she will owe for three months—3 x .02. Therefore, her interest will be $800 x .06 = $48.005) Linda bought a new television. The deal was attractive to her because she will be required to make monthly interest-only-payments on the $1,200 purchase for the first year. How much interest will she pay each month over the course of the first year assuming an 18 percent rate?Linda will pay 18/12 = 1.5 percent per month x 12 months. Therefore, she will pay $1,200 x .015 = $18 a month x 12 months = $216.006) Mimi charged four items on her credit card in the past week. If her charges were $13.45, $62,49, $78.32, and $114.51 how much should she pay when her bill comes due?Mini should pay the entire balance in order to avoid interest charges. She should play $13.45 + $62.49 + $78.32 + $114.51 = $268.777) Garvin bought skis that cost $500 at the new store opening. The store gave him 60 days free credit. However, if he does not pay within 60 days they will charge him a 12 percent annual interest rate. How much interest will Garvin pay if he lets the account go for 90 days.$500 x 12 x 3/12 = $15 assuming interest is not compounded daily or monthly.8) Jeremiah borrowed $1,500 from the bank to buy a home entertainment system. How much will he have to pay back in six months assuming the annual interest rate is 8 percent and he intends to pay the loan in full?$1,500 x .08 x 6/12 = $60 in interest plus the $1,560. ................
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