Word Problem

[Tinamylou]

Credit card charges: A customer carries an average daily balance on her credit card of $12.70 per day. The customer is offered a card from Bank A with no annual fee and 18% Finance charge. Bank B offers a card with 15% finance charge and $39.00 annual fee. Which card is more economical for the customer? What average daily balance would give the same total yearly charges?

$12.70 (30) = $381.00 per month $4,572.00 per year

Card A
$381.00 (.18) =68.58

Card B
$381 (.15) $57.15
I cannot figure out the next steps. Do I add the $39.00 or do I divide the $39.00 by 365 days (annual fee)?
I am not sure how to step up the alegebric formula.
Can you help?
Thank You, Tina

 

[Denis]

Credit card charges: A customer carries an average daily balance on her credit card of $12.70 per day.

Are you sure that's $12.70, not $1,270.00 ?

 

[Tinamylou]

average daily balance is $12.70 per day. How are you coming up with $1,270.00??
Thanks a million,
Tina

 

[JeffWest]

On card B you calculated the interest of one month. So if you wanted to tack part of the annual fee to that you would divide it by 12 to get the monthly fee and add it to the interest.

 

[Tinamylou]

Yes sir, I got that part.
What I am not understanding and confused about is : Look at my orginal post. I am needing help with the rest of the alegebric formula to figure out the second part of the problem. I have worked on this for many days and it is driving me crazy. I know it is not that hard. I guess I am just tired.

Any help with the formula for the final answer would be greatly appreciated!!!

Tina Ryan

 

[Denis]

average daily balance is $12.70 per day. How are you coming up with $1,270.00??

RELAX Tina. I'm asking you if the 12.70 YOU typed is a typo...
I have a feeling you SHOULD have typed: "average daily balance is $1270 per day"
$12.70 is sure a LOW average balance...

Anyhow, on the 2nd question:
"What average daily balance would give the same total yearly charges?"
Let a = average daily balance required
.18a = .15a + 39
.03a = 39
a = 39/.03 = 1300
So $1300 gives same total yearly charge.

Can you now see WHY I questionned your 12.70, thinking it should be 1270 ? :shock:

 

[Tinamylou]

Thank you for your help, it is greatly appreciated! I just wrote out the problem straight out ot the book. $27.00 is the correct anser:

Can you show me the steps to get to the answer of 1300.00

Thanks a million!!! -----Tina

 

[Denis]

I give up. Take over, Soroban :idea:

 

[Tinamylou]

Denis,

Thank you so much for the help. $12.70 is what the textbook gave me.

I see what you have done. you subracted 18 from 15 to get .03 and the added the $39.00
That is what I could not understand, you make it look so simple with your explaination.
I cannot thank you enough for your help, it is greatly appreciated.

Have a great day,

Tina