Dr. J's Maths.com
Where the techniques of Maths
are explained in simple terms.

Financial Maths - Credit cards.
Test Yourself 1 - Solutions.


 

 

1. (i) 3 to 10 January: (10 - 3) + 1 = 8 days.

(ii) 18 to 28 February: (28 - 10) + 1 = 11 days.

(iii) 16 March to 13 April:
In March: (31 - 16) + 1 = 16 days
In April: 13 days.

So total in the period = 16 + 13 = 29 days.

(iv) 21 May to 24 June:
In May: (31 - 21) + 1 = 11 days
In June: 24 days.

So total in the period = 11 + 24 = 35 days.
  2. (i) 22.5% ÷ 12 = 0.01875%

(ii) 22.5% ÷ 365 = 0.000616%

NOTE: it is the problem of leading zeros and so many digits that makes calculations so much easier to use the direct fraction -
for example (1 + 22.5%÷12)

  3.
  4.
  5.
Calculating interest.

6. (i)

(ii)

  7.
  8.
 

9. DO NOT convert the interest rate to a daily rate and write out the decimals. You will make an error. Instead write it as a fraction . That is then used (for compound interest) in the calculator as
. This way our number correponds exactly to the number given in the question - and we can see that.

Now take the three components of this question separately.

(i) the balance on 15 April of $3,141.59 plus interest:

To 6 June, there are 16 days to finish April (don't forget to start with 15 April as Day 1), 31 days in May and 6 days in June - so 53 days in total.

The following display shows that the screen on your calculator looks like:

(ii) purchase on the 20 May of $271.83 plus interest:

To 6 June, there are 12 days to finish May and 6 days in June - so 19 days in total.

(iii) purchase on 31 May of $42.42 plus interest:

To 6 June, there is 1 day to finish May and 6 days in June - so 7 days in total.

So, adding these three results together reveals that Gloria has a balance of $3,562.34 on her credit card when she makes her next payment on 6 June.
  10.
Reading a statement.

11. The computer entry is charged interest for 11 days.

Closing balance = $1,258.50

Minimum payment = 5% × $1,258.50 = $62.93.
  12.