Question

Your bank card has an APR of 18% and there is a 2% fee for cash advances. The bank starts charging interest on cash advances immediately. You get a cash advance of $1,200 on the first day of the month. You get your credit card bill at the end of the month. What is the approximate total finance charge you will pay on this cash advance for the month

Answer 1

Answer:

$42

Explanation:

APR = 18% , month rate = 18%/12 = 1.5%

Fee for cash advance = 2%

Cash advance of the first day of month = $1,200

Finance charge = Cash advance * (Monthly rate + Advance cash fee)

Finance charge = $1,200*1.5% + $1,200*2%

Finance charge = $18 + $24

Finance charge = $42

So, the approximate total finance charge i will pay on this cash advance for the month is $42