Asked by Jessica Woolf on Jul 18, 2024
Verified
How does a credit card company calculate finance charges on a credit card?
Finance Charges
Fees and interest charged on borrowed money, typically associated with loans, credit cards, and financed purchases.
Credit Card Company
A financial institution that issues credit cards, allowing cardholders to purchase goods and services on credit.
- Comprehend the fundamentals of finance charges associated with credit cards and strategies to reduce them.
- Determine the overall finance costs linked to installment agreements and loans.
Verified Answer
SC
Sanya ChauhanJul 19, 2024
Final Answer :
Finance charges are based on the average amount the consumer owes each day of the billing cycle.To calculate the charge,multiply the average daily balance by the monthly periodic rate,which is the APR (yearly interest rate)divided by 12.
Learning Objectives
- Comprehend the fundamentals of finance charges associated with credit cards and strategies to reduce them.
- Determine the overall finance costs linked to installment agreements and loans.
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