You have a credit card on which your beginning balance for the month was $400. On the 10th of the month you took out a cash advance of $500. During the month you made purchases of $250
Assuming that the interest rate on purchases is 15% (1.25% per month), the rate on cash advances is 18% (1.5% per month), and there is a 1% fee on all cash advances, what would you have to pay to pay off your account if your due date is the 30th of the month.
A) $1,165.00
B) $1,222.50
C) $1,305.00
D) $1,342.50
Answer: A
Explanation: A)
Beginning balance $400
Interest on beginning balance ($400 × 0.15)/12 $5
Cash advance $500
Service charge on cash advance ($500 × 0.01) $5
Interest on cash advance ($500 × 0.18) ÷ 3 × 2 $5
Current month's purchases $250
Total pay-off amount $1,165
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