Download Chapter 4 – Loans and Credit Cards

Chapter 4 – Loans and Credit Cards
4.1 – Promissory Notes
Interest = Principle x Rate x __________
Exact Interest – Time is # days / ___________
Ordinary Interest – Time is # days / __________
Rate of Interest = ________________ / Principal
4.2 – Discounted Promissory Notes
Principal x ______________________ = Bank Discount
Proceeds = Principal - ____________________________
True Rate of Interest = Interest / _________________________
4.3 – Interest Tables
Number of $100’s = _____________________/100
Interest = Decimal from Interest Table x ______________________________
Days Between:
January: _____
May: _____
September: _____
February: _____
June: _____
October: _____
March: ______
July: _____
November: _____
April: _____
August: _____
December: _____
Find the number of days left in the first month, add the number of days in any other month, and add the number of days
used in the last month.
4.4 – Installment Loans
Total of Monthly Payments = Monthly payment x _______________________
Finance Charge = Total of Monthly Payments - _________________________
Remainder to pay = Installment Price - _______________________
Monthly payment = Remainder to pay / _______________________
Monthly Interest Rate = Annual Interest Rate / ___________
Interest for the month = ________________ x Monthly Interest Rate
Amount applied to principal = _____________________ - Interest for the month
New Balance = Principal - _______________________
4.5 Early Loan Repayments
Describe the rule of 78
One-Month rules of 78 Finance Charge = Principal x Rate x ____________
One-Month Simple Interest Charge = Principal x Rate x _____________
Unearned finance charge = Total finance charge x _______________________
Earned finance charge = ________________ - Unearned finance charge
Early Loan Repayments:
Total of remaining payments = _________________ x Number of remaining payments
Unearned finance charge = Total finance charge x _______________________
Amount needed to repay the loan = Total of remaining payments - ________________________
4.6 – Annual Percentage Rates
Finance Charge per $100 of Amount Financed = (__________________/Amount Financed) x $100
4.7 – Credit Card Costs
Correct Balance = Statement balance - ____________________________________
Total Finance charge for year = Monthly Finance Charge x _______________
Balance transfer fee = Amount of money being transferred x ____________________
Total Cost of Credit Card for the year = ______________________ + _________________________+ membership fee
4.8 – Credit Card Finance Charges
Previous Balance Method
Finance Charge = Previous Balance x _________________________________
New Balance = Previous Balance + (Finance Charge + New Purchases + Fees) – (_______________ + Credits)
Adjusted Balance Method
Adjusted Balance = Previous Balance - _____________________ - Credits
Adjusted Balance Finance charge = Adjusted balance x _______________________
Adjusted Balance Method New Balance = Adjusted Balance + ___________________+ ____________________
Average Daily Balance Method
Sum of Daily Balance = Beginning Balance – (Payments + Credits) + (________________ + Fees)
Average Daily Balance = Sum of Daily Balances / ______________________________________
Finance Charge = Average Daily Balance x _________________________________
New Balance = Beginning Balance – (Payments + Credits) + (________________+New Purchases + Fees)
Cash Advances
Interest on Cash Advance = Cash advance x # of days x ________________________
Finance Charge = Interest + ______________
Payoff Amount = _________________________ + Finance Charge