1. Determine credit card interest?

How to determine credit card interest? I’m not sure how to use the example provided in my math book. It just does not seem to work for me.

Book example:

Previous Balance: $150.00 Minimum payment:$10.00
Interest per-annum: 18.6% (compounded daily)

$\displaystyle 140 * (1 + \frac {0.186}{365}) (365 * \frac {1}{12})$

= 142.19

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First off, if I enter that in my calculator I receive a syntax error; with or without the (365 x 1/12)

Second, if I use my own formula I receive a different answer:

1. 0.186 ÷ 12 = 0.0155 (Monthly Rate)
2. 0.0155 x 140 = 2.17 (different then the 2.19 shown in the example)

2. Credit card interest

How to determine credit card interest? I’m not sure how to use the example provided in my math book. It just does not seem to work for me.

Book example:

Previous Balance: $150.00 Minimum payment:$10.00
Interest per-annum: 18.6% (compounded daily)

$\displaystyle 140 * (1 + \frac {0.186}{365}) (365 * \frac {1}{12})$

= 142.19

----------------

First off, if I enter that in my calculator I receive a syntax error; with or without the (365 x 1/12)

Second, if I use my own formula I receive a different answer:

1. 0.186 ÷ 12 = 0.0155 (Monthly Rate)
2. 0.0155 x 140 = 2.17 (different then the 2.19 shown in the example)

The formula that the book gives (or, at least, should give) is:

$\displaystyle 140\times\left(1 + \frac {0.186}{365}\right)^{ \frac {365}{12}}$

which does give the answer 142.19.

Let me explain (1) why this formula is correct; (2) why your method is incorrect.

OK?