Question

Your friend has a credit card with an APR of 49.9%. What would his finance charge be on a $500 charge for just 1 month?(round to the hundredths place)

Answer 1

The finance charge on $500 at 49.9% APR will be $20.79 for one month.

Finance charge = principal × rate

Now monthly charge= P×R×(1/12)

charge = 500 ×0.499 ÷12 = $ 20.79166.. ≈ $20.79

APR is the short hand representation of annual percentage rate which is the rate of interest issued by a bank on a credit card or a loan.

An interest rate is the amount of interest that is payable each period stated as a percentage of the total that was lent, deposited, or borrowed.

The principal amount of the loan , interest rate of the loan , frequency of compounding the interest on the rate, and duration or time of the loan, deposit amount, or borrowing determine the total amount of the interest on the sum that was lent or borrowed.

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