Roger has a credit card with an APR of 19.40% and a billing cycle of 30 days. The following table shows his transactions with that credit card in the month of June.DateAmount ($)Transaction6/1265.40Beginning balance6/690.00Payment6/1643.33Purchase6/2237.71PurchaseIf Roger’s finance charge for June is $3.56, which method of calculating the finance charge does Roger’s credit card company use?

The daily balance method applies the daily rate to each balance for the number of days it remains. The balances are $265.40 for 5 days, $175.40 for 10 days, $218.73 for 6 days, and $256.44 for 9 days. Their weighted average is ($265.40×5 + $175.40×10 + $218.73×6 + $256.44×9) ÷ 30 = $223.38. Applying the 30-day rate, $223.38 × 19.40% × 30 ÷ 365, gives about $3.56, so the daily balance method matches.

AI-written and checked against the verified answer.