Exam 3: Consumer Credit

Last month,the ending balance on Maryanne's MasterCard was $1,789,the average daily balance was $755,and the monthly periodic rate is 1.85%.Her finance charge can be calculated by multiplying the ending balance times the monthly periodic rate.So the finance charge is $1,789 $\times$ 0.0185 = $33.10.

Jackson and Kate Jones do not pay their credit card in full each month,so they incur finance charges.On their last credit card statement,the average daily balance is $875,and the monthly periodic rate is 2.25%.What should be the finance charge on the statement?

Dr.Drake is thinking about retirement and decides to sail around the world once he retires.He buys a sailboat for $125,000.He borrows the money at an APR of 7.5% for five years.How much will his total interest be?

Rick carries a balance on his credit card each month.Today is the first day of the new,28-day billing cycle.The current balance is $2,360 and the APR is 21%.Rick is buying a friend an expensive gift that costs $1,500 that he plans to put on his credit card.This will be his only purchase this month.How much in finance charges can he save by making the purchase on the last day of the billing cycle versus the first day of the billing cycle?

Trey is taking out a loan for $85,000.It is a 20-year loan with an APR of 5.85% What will his monthly payment be?

Use the summary section of the monthly credit card statement below to calculate the finance charge. ​

Asa's most recent credit card statement had a balance of $2,622.77.The minimum payment warning box indicates that it will take 12 years to pay off the card if he makes the minimum payment of $28 per month.If he makes a monthly payment of $100,it will take 3 years to pay off the balance.What will be the percent increase in total payments if Asa only pays the minimum rather than the $100 per month?

Rhett is about to begin college and has received a 10-year $7,500 Federal Direct Unsubsidized Loan with an interest rate of 6.4%.He will be required to begin making payments six months after graduation.If Rhett decides to capitalize the interest accrued from the time he receives the funds until he begins making payment,how much total interest would he pay on this loan?

Regina pays her credit card balance in full each month.Last month her average daily balance was $345 and the APR is 11.2%.The finance charge on her current month's statement is $13.22.

FICO scores range from 300 to about 850.A score above 770 is excellent,a score above 700 is good,and a score below 600 is considered a credit risk.

Jamal is going to borrow $14,000 from his credit union to buy a used car.The APR is 7.0% and the length of the loan is 4 years.How much will Jamal pay in interest?

Miriam and Dave want to borrow $25,000 to put an addition on their house.They went over their budget,and they can afford to pay $450 a month.If the bank offers them a home improvement loan with an APR of 6.3%,what should the length of the loan be so they can afford the monthly payments?

Cedric purchased a new refrigerator and stove at Home Depot for $3,729 on a deferred payment plan with no down payment and no payment at all for six months.If the entire $3,729 is paid in full before three months is up,there is no interest.If it is not paid in full within the six months,there is a finance charge with an APR of 25.4% applied each month going back to the first month.If Cedric makes the full payment a week after the six months expired,what is the finance charge?

Yanni received her monthly credit card statement in the mail,the summary of which is shown below.When she calculated the new balance for the month,she arrived at a different amount than the credit card company.What should be the correct new balance? ​ ​

Jerry buys a $2,700 motorcycle on a deferred payment plan.There is no down payment and no interest for 18 months.Jerry must make a minimum payment of $75 a month.To avoid a retroactive APR of 21%,he must pay the balance in full before the 18 months has passed.If he pays $75 each month,how much should he pay the last month to avoid the interest charges?

Garth had unexpected expenses this month and didn't have enough in his saving account to pay the rent of $600.He went to Loanshark Larry's to borrow the money until his next paycheck 15 days from now.Larry charges $100 interest for the 15 days.What is the APR for this payday loan?

The Truth-in-Lending Act protects consumers from harassment from creditors.

How does a credit card company calculate finance charges on a credit card?

George wants to borrow $30,000 to purchase a car.After looking at a monthly budget he realizes that all he can afford to pay per month is $350.The dealership is offering a 4.77% loan.When George hears how much interest he will pay over the life of the loan,he decides to cut back on his entertainment expenses and pay $400 per month.How much in interest will George save by paying an extra $50 per month? Hint: Round any loan length calculations to the nearest quarter of a year.

A FICO score is named after its creator,Fair,Isaac,and Company.It summarizes the probability that a person with debt will repay that debt.