Joey has a credit card that uses the previous balance method. The opening balance of one of his 30-day billing cycles was $0, but this was his balance for only the first 15 days of the billing cycle. He then made a purchase that increased his balance to $7200, and his balance stayed this amount for the remainder of the billing cycle. If his credit card's APR is 13%, how much was Joey charged in interest for the billing cycle?

Question

Emilia Bass

Mathematics

25 July, 00:25

Joey has a credit card that uses the previous balance method. The opening balance of one of his 30-day billing cycles was $0, but this was his balance for only the first 15 days of the billing cycle. He then made a purchase that increased his balance to $7200, and his balance stayed this amount for the remainder of the billing cycle. If his credit card's APR is 13%, how much was Joey charged in interest for the billing cycle?

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Answers (2)

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Adrian Franco · Answer 1

This interest is charged based on the average balance over the 30 days. Joey's average balance over the 30 days was $3600 ($7200/2 = $3600). APR is the rate over 1 year, so he is being charged 1.08% per month (13%/12 months = 1.08% or 0.0108). Now we take the average balance, $3600, multiplied by the rate per month, 1.08% as a decimal. Therefore, $3600*0.0108 = $38.88 in interest this month.

Ezekiel West · Answer 2

Nope the answer would be $0 for apex