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Buy Now, Pay Later Many people make purchases using credit cards.

Learn why people choose to buy using credit cards instead of cash and how to calculate the new balance on a charge account. Explore terms like credit card, charge account, account statement, and finance charge.

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Buy Now, Pay Later Many people make purchases using credit cards.

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  1. Buy Now, Pay Later Many people make purchases using credit cards. Why might you want to buy something using a credit card instead of cash?

  2. Lesson Objective Calculate the new balance on a charge account. Content Vocabulary • credit card credit card A card authorizing purchases on credit. charge account An existing line of credit at the business that issued it. account statement A bank statement the shows the status of your account, including all deposits to, withdrawals from, and interest earned and credited to your account. finance charge Interest charged by a credit card or charge account company for not paying the total amount owed by the due date. • charge account • account statement • finance charge

  3. Lesson Objective Compute the finance charge by using the unpaid-balance method. Content Vocabulary • unpaid-balance method unpaid-balance method Computing the finance charge on a credit account based on the portion of the previous monthly balance you have not paid.

  4. Lesson Objective Compute the finance charge based on the average-daily-balance method–new purchases included. Content Vocabulary • average-daily-balancemethod average-daily-balance method Computing the finance charge on a credit account based on the average balance at the end of each day of the billing period.

  5. Summary New Balance = Previous Balance + Finance Charge + New Purchases – (Payments + Credits) Helpful Payment Formulas Unpaid Balance = Previous Balance – (Payments + Credits) Paying Balances Credit cards allow you to purchase now and pay later.

  6. Sheila Sojourner’s charge account statement showed a previous balance of $1,205.40, a finance charge of $24.30, new purchases of $230.54, and a payment of $543.00. What is Sheila’s new balance? • $917.24 • $987.56 • $1,460.24 • $1,640.86

  7. The previous balance on Tuan Yang’s charge account statement is $85.40. He made a payment of $186.50 and had charges of $24.30, $102.30, and $31.25. His finance charge was $4.50. What is Tuan’s new balance? • $13.15 • $61.25 • $65.50 • $271.90

  8. Blake Fair’s credit card statement showed a previous balance of $198.56, a finance charge of $5.63, new purchases of $965.40, and a payment of $1,000.00. What is Blake’s new balance? • $169.59 • $254.30 • $311.09 • $691.20

  9. Myron Burney’s has a previous balance of $980.54. During the month, he made a payment of $500 and purchases of $128.50. What is his unpaid balance? • $287.60 • $352.23 • $609.04 • $980.54

  10. Melinda Baxter’s charge account statement shows an unpaid balance of $321.06. The monthly finance charge is 1.5% of the unpaid balance. What is the finance charge? • $1.50 • $3.78 • $4.82 • $6.03

  11. Roland Moore’s charge account statement shows an unpaid balance of $925. The monthly finance charge is 1.75% of the unpaid balance. What is the new account balance? • $16.18 • $120.45 • $902.13 • $941.19

  12. ALGEBRA Maria Leon’s charge account uses the unpaid-balance method to compute the finance charges at a monthly rate of 2.5%. During the month, she charged $329.08, made a $400 payment, and had an $18.50 finance charge. What is her new balance? • $687.58 • $925.58 • $1,087.58 • $1,487.58

  13. Debbie Walsh’s charge account uses the average daily balance – new purchase included method of computing finance charges at a monthly periodic rate of 1.5%. Last month, her average daily balance was $231.09. What was her finance charge? • $3.47 • $4.30 • $4.87 • $4.90

  14. ALGEBRA Amir Arriaga’s credit card finance charge is based on the average daily balance method—new purchases included. His monthly periodic rate is 2.7%, and her finance charge for the past billing cycle was $39.50. Find her average daily balance. • $1,109.51 • $1,260.87 • $1,326.39 • $1,462.96

  15. Selma Mora’s finance charge on her credit card is computed at 1.8% of the average daily balance. Last month, her average daily balance was $429.56. How much did she pay in finance charges? • $7.03 • $7.73 • $13.45 • $17.49

  16. End of Chapter 7 Charge Accounts and Credit Cards

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