Credit Card Interest Calculation Quiz

What is the purpose of dividing the annual percentage rate by 365 in the credit card interest formula?

• To convert the annual rate to a monthly rate

• To calculate the weekly interest

• To convert the annual rate to a daily rate

• To adjust for leap years

How is the average daily balance calculated in a billing cycle?

• By using only the balance on the last day of the cycle

• By summing all daily balances and dividing by the number of days

• By averaging the balances of the first and last day

• By taking the highest balance of the month

In the given example, what was the total amount charged to the credit card on the 28th day of the cycle?

• $200

• $400

• $150

• $1,200

What is the first step in using the formula to calculate monthly interest?

• Apply the daily interest rate

• Find the number of days in the billing cycle

• Calculate the average daily balance

• Determine the annual percentage rate

What is the final monthly interest calculated in the example provided?

• $6.48

• $12.25

• $19,300

• $643.33