1. Financial Algebra © Cengage/South-Western Slide 1 CONSUMER CREDIT 4-1Introduction to Consumer Credit 4-2Loans 4-3Loan Calculations and Regression 4-4Credit Cards 4-5Credit Card Statement 4-6 Average Daily Balance 4

2. Financial Algebra © Cengage/South-Western Slide 2 4-5 CREDIT CARD STATEMENT To identify and use the various entries in a credit card statement. OBJECTIVES

3. Financial Algebra © Cengage Learning/South-Western Slide 3 billing cycle credit card statement account number credit line available credit billing date payment due date transactions debit/credit previous balance payments/credits new purchases late charge finance charge new balance minimum payment average daily balance number of days in billing cycle APR monthly periodic rate Key Terms

4. Financial Algebra © Cengage Learning/South-Western Slide 4 billing cycle available credit transactions debit credit average daily balance APR monthly periodic rate Key Terms

5. Financial Algebra © Cengage Learning/South-Western Slide 5 What information does a credit card statement give you? How might a credit card company benefit from a shorter billing cycle for a college student who has yet to establish a credit track record? Describe the types of errors a credit card user might find on his or her monthly credit card statement. How can you establish credit responsibly?

6. Financial Algebra © Cengage Learning/South-Western Slide 6

7. Financial Algebra © Cengage Learning/South-Western Slide 7 The summary portion of Jane Sharp’s credit card statement shown is above. a. Explain how the new purchases amount was determined. b. Explain how the new balance amount was determined. Example 1

8. Financial Algebra © Cengage Learning/South-Western Slide 8 Suppose you create the following spreadsheet that models the statement summary and input the values in row 2. Write the spreadsheet formula to compute the new balance in cell F2. CHECK YOUR UNDERSTANDING

9. Financial Algebra © Cengage Learning/South-Western Slide 9 Pascual has a credit line of $15,000 on his credit card. His summary looks as follows. How much available credit does Pascual have? Example 2

10. Financial Algebra © Cengage Learning/South-Western Slide 10 Rhonda had a previous balance of $567.91 and made an on-time credit card payment of $567.91. She has a credit line of x dollars and made purchases totaling y dollars. Write an algebraic expression that represents her current available credit. CHECK YOUR UNDERSTANDING

11. Financial Algebra © Cengage Learning/South-Western Slide 11 Myrna is examining the summary section of her credit card statement. Myrna has checked all the entries on her bill and agrees with everything except the new balance. Determine where the error was made. Example 3

12. Financial Algebra © Cengage Learning/South-Western Slide 12 Determine the error that was made using the following summary statement. CHECK YOUR UNDERSTANDING

13. Financial Algebra © Cengage Learning/South-Western Slide 13 Do all questions: 2 – 7credit statement 8, 9, 12available credit 10, 11APR 13 – 19credit statement APPLICATIONS, pp. 204-205