4 5 CREDIT CARD STATEMENT OBJECTIVES To identify

4 -5 CREDIT CARD STATEMENT OBJECTIVES To identify and use the various entries in a credit card statement. Slide 1 Financial Algebra © Cengage/South-Western

Key Terms l l l l l Slide 2 billing cycle credit card statement account number credit line available credit billing date payment due date transactions debit/credit previous balance l l l l payments/credits new purchases late charge finance charge new balance minimum payment average daily balance number of days in billing cycle l APR l monthly periodic rate Financial Algebra © Cengage Learning/South-Western

Example 1 The summary portion of Jane Sharp’s credit card statement shown is above. a. Explain how the new purchases amount was determined. b. Explain how the new balance amount was determined. Slide 3 Financial Algebra © Cengage Learning/South-Western

Example 1 The summary portion of Jane Sharp’s credit card statement shown is above. a. Explain how the new purchases amount was determined. b. Explain how the new balance amount was determined. Slide 4 Financial Algebra © Cengage Learning/South-Western

CHECK YOUR UNDERSTANDING Suppose you create the following spreadsheet that models the statement summary and input the values in row 2. Write the spreadsheet formula to compute the new balance in cell F 2. Slide 5 Financial Algebra © Cengage Learning/South-Western

Example 2 Pascual has a credit line of $15, 000 on his credit card. His summary looks as follows. How much available credit does Pascual have? Slide 6 Financial Algebra © Cengage Learning/South-Western

CHECK YOUR UNDERSTANDING Rhonda had a previous balance of $567. 91 and made an on-time credit card payment of $567. 91. She has a credit line of x dollars and made purchases totaling y dollars. Write an algebraic expression that represents her current available credit. Slide 7 Financial Algebra © Cengage Learning/South-Western

Example 3 Myrna is examining the summary section of her credit card statement. Myrna has checked all the entries on her bill and agrees with everything except the new balance. Determine where the error was made. Slide 8 Financial Algebra © Cengage Learning/South-Western