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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….

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Credit Cards & Store Promotions

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  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!

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