Jason’s credit card has an APR of 17.02% and a 30-day billling cycle. The following table details Jason’s transactions with that card in the month of June.DateAmount ($)Transaction6/1746.28Beginning balance6/9140.00Payment6/1528.76Payment6/1869.49PurchaseBetween the adjusted balance method and the daily balance method, which method of computing Jason’s June finance charge will result in a greater finance charge, and how much greater will it be?

Using the adjusted balance method, subtract the payments from the $746.28 beginning balance and exclude the purchase: $746.28 − $140.00 − $28.76 = $577.52. The monthly rate is 17.02% ÷ 12, so the finance charge is about $8.19. For the daily balance method, the balances across the 30 days total $19,751.61, giving an average daily balance of $658.39; applying the daily rate, 17.02% ÷ 365, for 30 days gives about $9.21. The daily balance method is therefore about $1.02 greater, matching choice A.

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