Consumer credit Assignment Example | Topics and Well Written Essays - 250 words

Consumer credit - Assignment Example en busy at work, he has not had time to carefully review his monthly statements, but is spending the weekend catching up on paying bills and organizing his desk. He is particularly interested in how much he still owes the credit card company. He reviews the statement and discovers there is a page missing – the one with the unpaid balance. He can see that his beginning balance for March (March 1 through March 31) was $800 and that he paid $280 on March 12, charged purchases of $150 on March 5, $100 on March 20, and $50 on March 30. Ling remembers that the Annual Percentage Rate (APR) on the credit card is 16% of the unpaid balance and interest is charged using the average daily balance method, including current purchases. d. Answer: Average daily balance is calculated by including the outstanding balance, new purchases and deducting payments and credits on each day in the billing cycle, we need to divide by number of days in the billing cycle. From the author’s point of view, the five factors are named as â€Å"Satisfying needs in case of insufficient income†, â€Å"Convenience in case of cashless case†, â€Å"Socialization and modernization†, â€Å"Easiness and safety in comparison with carrying cash† and â€Å"Shopping via telephone and inter-net†. (Okan Veli à ¹afakli, 2007). Credit cards can be a convenient means of payment, a useful tool for learning financial responsibility, a resource in case of emergencies, a means to establishing a good credit history and a way to gain greater access to credit in the future. If credit cards are mismanaged or misused, however, the disadvantages can result in severe financial consequences. (Louisiana State University, 2003). Ling has used the credit card wisely. He made the payment on time and as it is a revolving credit, it is good to charge the card and simultaneously make payments. This can have good impact on the credit history. It is a good practice to keep the balance less than the credit limit and this can