Mike only uses his Visa Card to purchase gasoline for his truck. On January 1 st
ID: 3013729 • Letter: M
Question
Mike only uses his Visa Card to purchase gasoline for his truck. On January 1 st , the billing date, Mike had a balance of $325. From January 1 st through January 31 st he filled his truck up 2 more times and he charged a total of $125 to his credit card. He also made one payment of $175.
1. Mike ’s Visa Card has an interest rate of 1.2% per month. How much interest will be on the statement he receives February 1 st ? ( 5 points)
2. What will his new account balance be on February 1 st ? ( 5 points)
3. What will his finance charge be on March 1 st ? (5 points)
4. For January and February, wha t is the total interest Mike will pay? (5 points
Explanation / Answer
1) On February 1st, Mike will receive interest = $[(325-125+175)*1.2%]
= $(375*1.2%)
= $4.5
2) On February 1st, his new account balance is = $(375+4.5) = $379.5
3) On March 1st, his finance charge will be = $(379.5*1.2%) = $4.55
4) For January and February, the total interest Mike will pay is = $(4.5+4.55) = $9.05