Melody has a credit card that uses the previous balance method. The opening balance of one of her 30-day billing cycles was $0, but this was her balance for only the first 15 days of the billing cycle. She then made a purchase that increased her balance to $4800, and her balance stayed this amount for the remainder of the billing cycle. If her credit card's APR is 29%, how much was Melody charged in interest for the billing cycle?

A. $139.20
B. $57.21
C. $0
D. $114.41

Question

Melody has a credit card that uses the previous balance method. The opening balance of one of her 30-day billing cycles was $0, but this was her balance for only the first 15 days of the billing cycle. She then made a purchase that increased her balance to $4800, and her balance stayed this amount for the remainder of the billing cycle. If her credit card's APR is 29%, how much was Melody charged in interest for the billing cycle?

 		A.	$139.20
 		B.	$57.21
 		C.	$0
 		D.	$114.41

miracrown · Answer

Do you remember what "previous balance method" is?
Using the previous balance method, what number is the interest calculated on?

miracrown · Answer

The definition of this method is key. Previous Balance Method uses the "previous" balance - that is, the balance from the month before
what was her balance at the beginning of the billing cycle?
$0, right?
This is what she pays interest on so she doesn't have to pay any interest yet
(she will next month, though) Does that make sense? :]

anonymous · Answer

YEWS! thank you!!

miracrown · Answer

yw :]