Using the Adjusted Balance Method: If Monty sends in a payment for $1,000, how much will the finance charge be on his remaining balance? (Use the $6,000 balance for your calculations.)
Monty currently has a Visa card from his bank with the following terms: 18% on purchases, 24% on cash advances with a 4% cash advance fee on the amount, and a default or penalty rate of 36%. His current statement shows a balance of $6,000. So far he has only taken one cash advance, withdrawing $1,000 from a casino in Las Vegas a year ago, which he has already paid off. Lately he has been having a hard time paying more than the minimum payment of 4% of his balance. The only assets he owns are a seven-year-old car and a $2,500 certificate of deposit that has a 5% APR.
A) $75
B) $90
C) $110
D) There is not enough information to solve this question.
Answer: A
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