4.4-4.5B Credit Cards and Statements Worksheet

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What is a credit card statement?

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A credit card statement is a monthly summary of all transactions made on a credit card, including purchases, payments, fees, and interest charges.

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How is the finance charge on a credit card calculated?

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The finance charge is typically calculated as a percentage of the average daily balance or the new balance, depending on the credit card issuer's terms.

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What is the minimum payment on a credit card?

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The minimum payment is the smallest amount a cardholder can pay to keep the account in good standing, often calculated as a percentage of the new balance.

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What does 'available credit' mean?

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Available credit is the amount of credit a cardholder can still use, calculated by subtracting the current balance from the credit limit.

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How do you calculate the average daily balance?

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The average daily balance is calculated by adding up the daily balances for each day in the billing cycle and dividing by the number of days in the cycle.

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What is the significance of the new balance on a credit card statement?

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The new balance is the total amount owed on the credit card at the end of the billing cycle, including purchases, payments, and finance charges.

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What is the formula to calculate the minimum payment if it is 3% of the new balance?

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Minimum Payment = New Balance x 0.03.

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What does it mean if a credit card has a credit line of $9,000?

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A credit line of $9,000 means that the cardholder can borrow up to $9,000 on that credit card.

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How do you determine the finance charges for a credit card?

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Finance charges can be determined by applying the interest rate to the average daily balance or the new balance, depending on the card's terms.

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What is the difference between a credit limit and available credit?

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The credit limit is the maximum amount a cardholder can borrow, while available credit is the remaining amount that can still be used after accounting for the current balance.