Statements & Finance Charge Lesson 13

Account Statements 13a

With a credit card or charge account a monthly account statement is received that lists all the items purchased during a one-month period. The credit card company will add on a finance charge which is a charge for delaying payment.

Formula to find amount due on payment… New Balance Previous Balance Finance Charge New Purchases = + + - - Payments Credits

Use the table to find the new balance on the charge account. Bill Closing Date Previous Balance Finance Charge Total Purchases This Month Credits Payment New Balance 09/30 $332.64 $5.64 $173.03 $31.94 $50.00 10/31 $6.58 $148.55 $57.95 $150.00 11/30 $3.54 $123.45 $30.50 $100.00 $429.37 $429.37 $377.59 $377.59 $373.04

Finance Charge: Unpaid Balance Method

Some use the unpaid-balance method to compute finance charges Some use the unpaid-balance method to compute finance charges. This means the finance charge is based on the balance that has not yet been paid.

Formula to find amount due on payment… Unpaid Balance Previous Balance = - - Payments Credits Finance Charge Unpaid Balance Periodic Rate = x New Balance Unpaid Balance Finance Charge New Purchases = + +

Suppose the monthly finance charge is 1. 5% of the unpaid balance Suppose the monthly finance charge is 1.5% of the unpaid balance. Use the table and the unpaid-balance method to find the new balance on the charge account. Previous Balance Payments Credits Unpaid Balance Finance Charge New Purchases New Balance $132.40 $40.00 $79.55 $50.00 $95.99 $75.00 $105.05 $92.40 $1.39 $173.34 $173.34 $123.34 $1.85 $221.18 $221.18 $146.18 $2.19 $253.42

Lesson 13: Statements & Finance Charge Summarize your notes Homework Worksheet