Attempts Keep the Highest 15 10. Finance charges on credit cards Finance Charges on Credit Cards Even before you use a new credit card, what information is the institution that issued your card required by law to disclose? The rate of interest and method used to compute finance charges The method used to compute finance charges and estimated dollar amount of finance charges The rate of interest and estimated dollar amount of finance charges The interest rate on cash advances is generally lower than the rate on purchases. The most common method that banks and retail credit card issuers use to compute finance charges is the average daily balance (ADB) method. You expect to actively use your card. Which variation of the ADB method will be least expensive for you? ADB excluding new purchases ADB including new purchases It doesn't matter Consider the following che On June 1, Teresa's credit card has a balance of $1,125 25. According to the terms of the card's lendinu agreement, antrest rate of 20 per year assessed and the monthly finance charges are calculated using the Avenge Daily Balance (ADB) including purchases method Consider the following case On June 1, Teresa's credit card has a balance of $1,125.25. According to the terms of the card's lending agreement, an interest rate of 20% per year is assessed and the monthly finance charges are calculated using the Average Daily Balance (ADB) including purchases method. During the month, Teresa expects to make the purchases listed below and will make a payment of $84.39 on June 24, and has collected the following additional information: Date June Jun 10 Purchases $102.39 1.722.13 1,184.19 15.13 June 22 June 28 Additional Information Monthly interest rate 1.675 Beginning card balance 51,125 25 Days in the month 30 Use the following table to help Teresa estimate her monthly interest charge for June. Dates Number of Days Calculated Value Daily Balance $1,125.25 6/2 - 6/8 7 2 12 6/9 - 6/10 6/11 - 6/22 6/23 - 6/24 6/25 - 6/28 6/29 - 6/1 2 4 3 30 Total Average Daily Balance With Purchases Finance Charge One way by which Teresa can reduce her finance charges, everything else remaining constant, is to: Make more, even more expensive purchases. Make smaller payments, Request a lower interest rate on her credit card