4-6

AVERAGE DAILY BALANCE OBJECTIVES Calculate

the average daily balance using the credit calendar.

Calculate

the finance charge using the credit calendar.

Slide 1 Financial Algebra © Cengage/South-Western

Slide 2

Key Terms

  average daily balance credit calendar Financial Algebra © Cengage Learning/South-Western

Example 1

Use the information given in Elena Kaye balance. ’ s credit card statement to verify the accuracy of her average daily Slide 3 Financial Algebra © Cengage Learning/South-Western

Slide 4

CHECK YOUR UNDERSTANDING

Is there a better time during the billing cycle when Elena could have made her payment so that the average daily balance would have been less? Financial Algebra © Cengage Learning/South-Western

Example 2

Determine the finance charge for Elena ’ s billing cycle. Slide 5 Financial Algebra © Cengage Learning/South-Western

Slide 6

CHECK YOUR UNDERSTANDING

When might Elena have made her purchases during the billing cycle in order to decrease her finance charge? Financial Algebra © Cengage Learning/South-Western