We assume that the billing period is one week rather than one month and that the weekly rate is 1%. You begin with a balance of $1000. On day 1, you charge $300. On day 3, you charge $500. On day 6, you make a payment of $400 and you charge $100.
Assume that finance charges are calculated using the average daily balance. Find the account balance at the end of the week. (Round your answer to the nearest cent.)
So I got 1000 + 300 = 1300 x 0.01 = 13 so 1313 after day one.. 1313 + 500 = 1813 x 0.01 = 18.13
1813 + 18.13 = 1831.13 after day three.... 1831.13 - 400 + 100 = 1531.13 x 0.01 = 15.31
1531.13 + 15.31 = 1546.44 This answer is wrong and I can not find any help in my math book.
I'm not familiar with credit cards and how they charge interest. First, you must remember that 1% is a WEEKLY rate. I would prorate it for any number of days. The easiest thing to do is to take the balance at the end of each day and calculate the interest on it for 1 day a time.So, $1,300 x 0.01/7 =$1.86 at the end of day 1. I believe if they calculate it daily, then that means that the 1% WEEKLY rate is compounded daily. The balance at end of day 1 should be: $1,301.86. Then this balance is carried to day 2 as $1,301.86 x 0.01/7=$1,303.72 - balance at the end of day 2......and so on.
Try this method and see if it gives you the correct answer. Good luck.