1 / 24

Credit Cards & Store Promotions

Credit Cards & Store Promotions. Investment Returns = Low Int. Rates. Borrowing Charges = High Int. Rates. Example. Savings account = 1.5% return. Borrowing money or unpaid balances on credit cards could = 19% - 28%. Calculating payment on unpaid balance on Credit Card….

Download Presentation

Credit Cards & Store Promotions

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript


  1. Credit Cards &Store Promotions

  2. Investment Returns= Low Int. Rates Borrowing Charges= High Int. Rates

  3. Example Savings account = 1.5% return Borrowing money or unpaid balances on credit cards could = 19% - 28%

  4. Calculating payment on unpaid balance on Credit Card…

  5. -Mike Spenslothas an unpaid balance on his credit card of $4384.76 -His card charges a rate of 19.50% per annum. -The payment was due on March 23rd.

  6. His minimum payment is $50 or10% of the outstanding balanceWhich ever is the GREATER

  7. What is the minimum balance he will have to pay? 10% of $4384.76 = $43.85 $43.85 is less than $50, SO… Minimum Payment = $50

  8. What will his balance be on the 15th of April First, calculate how many days it will be from March 23rd & April 15th Include the 23rd & the 15th

  9. 31 Days in March31 – 23 = 9 15 days in April till the balance date 9 + 15 = 24 Days to calculate for

  10. Next, convert rate to a decimal 19.50% = 0.1950

  11. Now, as interest is calculated (usually) /annum… We need to adjust the equation from 1yr to 24 days

  12. We use I=Prt So, I = ($4384.76) (0.1950) (24÷365) I = $56.22

  13. To answer the question of “what would the balance be on the 15th of April”… We use A=P+I A = $4384.76 + $56.22 =$4440.98

  14. Let GIT R DUN

  15. Store Promotions

  16. These Promotions Usually have a HIGH Int. Rate BUILT IN Be sure you understand ALL the details BEFORE signing ANY agreement

  17. Blogginsis buying a new flat screen TV from Future shop EXAMPLE The offer is, $989.95 – No $$ down and 4 “easy” payments of $265

  18. What is the total cost of the TV on the payment plan? 4 x $265 = $1060

  19. What is the different btwn the list price and what BlogginsPaid? $1060 – $989.95 = $70.05 = $70.05 of Interest over 4 months

  20. What was the rate of interest? Simple Interest formula I = Prt

  21. Except we switch it up We need to find the Rate r = tx I P

  22. I = Prt $70.05 = (989.95)(r)( 4 ) 12 $70.05 = (989.95)( 1 )r 3 3 x $70.05 = 989.95r

  23. r = tx I P • r = 3 x$70.05 • 989.95 • r = 0.212 • Convert 0.212 to % = 21.2%

  24. 21.2% • REALLY!

More Related