Credit Cards (business math)

[astone788]

Anyone know how to do credit cards? It makes no sense. I don't even know why they put in in the study design.

Going to ask teacher if it's worth learning this. It seems real complicated.

[TrueTears]

which part don't you get?

firstly the 18% is a nominal rate compounded daily, hence the division by 365 (even in leap years the convention is to use 365 days)

All of the interest calculated is simple interest since the length of the transaction is within one year, convention is after one year, compounding interest is used.

total payment: the closing balance is the balanced carried over from previous periods, new purchase price - fairly obvious, and the interest is the simple interest calculated.

[astone788]

I understand If the balance is not paid in full by the due date, interest is backdated and charged from the day of the first purchase. So basically the 'interest-free-period' is gone.

"convention is after one year, compounding interest is used." What do you mean by that?

[Stick]

I don't think I've even come across a question like this in any of the trials I've done (I also have the same textbook as you). The study design doesn't really go into this in much detail either (one of the bullet points merely includes the words "credit/store cards" within it). This is something that is concerning me because if VCAA throws it into their exams a whole heap of students are going to get it wrong.

[astone788]

Teacher told me credit card are simple interest. I'm not going to fret about credit cards too much. I just want to know the nuts and bolts.

[astone788]

Through trial and error when finding the time between Payment date and Purchase date - you must include the day of the purcahse date. DO NOT include the day of the payment day.

[Stick]

Look, these are definitely worth working through because you can put yourself ahead of the majority of the cohort. Also, they're not too difficult either. The other thing worth learning is the credit card statements a page or two earlier - the formula is just: Closing balance=opening balance-payments+purchases+interest. VCAA will provide you with their own set of constraint for the final charge.

[TrueTears]

"convention is after one year, compounding interest is used." What do you mean by that?

If the term of any transaction is greater than 1 year, then interest is compounded and not calculated as simple interest. Although there could be exceptions which are expressly stated, however unless the contrary, it will always assumed to be compounded.

[astone788]

Thanks for all your help. Couldnt be bothered internalizing all this stuff, but I will definitely slap these examples in my bound reference. Now I need to learn business math graphs. My teacher said they won't neccesarrily get you to draw the graphs, but they want you to understand the different types of graphs e.g. simple/compound depreciation.

[Stick]

Yes, graphing is something many students just seem to omit. You need to understand what each relationship looks like.

Also, speaking of the devil, I just came across a credit card question in a trial exam.

[astone788]

Lol. Study hard my dude