A credit card has an annual interest rate of 20,99%, and interest charged is calculated at the end of the billing cycle. The minimum payment on the credit card is the greater of $20 or 2% of the unpaid balance. At the beginning of a 30-day billing cycle, the unpaid balance was $950 and purchase of $57, $75 and $113 were made respectively on days 12, 15 and 24. Moreover, a purchase of $550 was made on the last day and $355 was credited to the account on the day 24. 1. Calculate the unpaid balance at the end of the cycle. 2. Determine the interest charged in this billing cycle. 3. At the end of the billing cycle, determine the new balance at the beginning of the next cycle, given that the minimum payment has been paid.

1. The unpaid balance at the end of the cycle is $840

2. The interest charged in this billing cycle is $15.17

3. The new balance at the beginning of the next cycle is $835.17

Explanation:

Assuming that a purchase of $550 was made on the last day is not debited in same day, but in 2 days later as almost banks and credit card providers currently do.

The unpaid balance at the end of the cycle = Unpaid balance at beginning $950 + new purchase $57, $75, and $113 - credited amount $355 = $840

For credit card, the interest is charged on unpaid balance at the end of the cycle.

The interest charged in this billing cycle if interest charge on $950 in 23 days; and then charge on $595 in 7 days from 24th to 30th because $355 was credited to the account on the day 24.

= $950x20.99%/360x 23 days + $595 x20.99%/360x 7 days = $15.17

The minimum payment on the credit card is the greater of $20 or 2% of the unpaid balance; 2% of unpaid balance $840 is $16.8. Then the minimum payment required for this billing cycle is $20.

Thus the new balance at the beginning of next cycle = unpaid balance at the end of previous cycle $840 + interest charged $15.17 - minimum payment credited $20 = $835.17