Quiz Review: Average daily balance

Financially savvy people take advantage of the grace period on major purchases and pay the balance off in​ full; thus avoiding finance charges.

• True

• False

​Typically, the credit card issuer allows you a grace​ period, which means

• interest charges are reduced during this time.

• you are not charged any interest during this grace period.

• you must pay your balance off in full to benefit from the grace period.

• you do not have to make a payment during the current month.

• both B and C apply.

Assume a 31−day month to calculate your average daily balance for your credit card bill. Your daily balance for the first 10 days was​ $1,400, for the next 10 days was​ $1900, and for the last 10 days was​ $2700. What will your average daily balance be at the end of the​ month?

• $193.58

• $1.94

• $1935.48

• $19.35

Assuming the APR on your credit card is​ 18% and your average daily balance this month was​ $10,000, what will your interest or finance charges for the month​ be? Use monthly periodic rate.

• $60

• $150

• ​$1.50

• $180

The _________ method is the method of computing the finance charge on a credit account based on the average of the account balance at the end of each day of the billing period. 

• finance charge 
• average daily balance 
• credit card 
• account statement 

The _______ is the interest that is charged to a credit account if the account holder does not pay off the balance in full. 

• charge account 
• account statement
• credit card 
• finance charge

Mary’s average daily balance for last month was $750. The finance charge was $12.24. What was the APR?

• 0.0163%

• 19.6%

• 1.63%

• 0.196%

Hannah did not pay her American Express credit card bill in full in May. Her June bill showed a finance charge, and she wants to see whether or not it is correct. The average daily balance is $1,359.25, and the APR is 22.2%. Find the finance charge for her June statement.

• $301.75

• $19.57

• $25.15

• $403.97

Ralph just received his June FlashCard bill. He did not pay his May bill in full, so his June bill shows a previous balance and a finance charge. The average daily balance is $470, and the monthly periodic rate is 1.5%. What should Ralph’s finance charge be?

• $7.05

• $7.12

• $7.45

• $7.78

If the sum of the daily balances of a credit card totals $3,865.50 over 30 days, what is the average daily balance?

• $238.85

• $128.85

• $218.58

• $175.96