For this assignment you will need the prime interest rate, as posted in the Wall Street Journal.
Use the Internet to search for the current prime interest rate.
List the current prime interest rate:_______________
1. You have a credit card that is charging you 9.9% + the current prime rate. What is that interest rate on the credit card today?
2. If this same card were issued 30 years ago, what would your interest rate be? In the event that there were multiple prime interest rates for a year, use the one that is 30 years from the day your class started. Use the Internet to determine what this rate is.
3. In the month of April, your credit card (which is charging you 9.9% + the current prime interest rate) has a balance of $1000. On April 3rd you charge $100, then on April 20th you put 15 gallons of gas on the card. On April 23rd your payment of $400 arrives and is posted to your account. Finally, on April 27th you charge all of your food for the month for your family of 4.
a) What is your average daily balance at the end of the month on this card? Hint: You will need to research and find the cost of gas and food in order to solve this. Use the national average as of four months before the date Assignment is due. For instance, if your Assignment is due November 3rd, 2012, use the July 2012 national average.
b) How much interest will your card charge you this month, assuming interest is charged on the average daily balance?
c) If this card were using the interest rates of 30 years ago, how much interest would your card charge you this month?