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HSC Standard Maths Resources

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11.3 Credit Cards

The following are some of the things you would expect to see in credit card statement:

• Opening balance: balance unpaid at the start of the period.
• Closing balance: balance unpaid at the end of period.
• Minimum payment due: Minimum amount you need to pay by due date.
• Interest free period: No. of days credit can be availed without any interest charged calculated from day 1 of statement period.
• Cash advance: Transactions within interest-free period do not get charged interest, however, that does not apply to any cash taken out which is charged interest.
• Interest rate: rate of interest charged if outstanding balance is not paid by due date. This interest rate is usually compounded daily.

Example 1

Consider the following credit card statement for August.

Minimum payment: \$15 or 2.5%

Interest free days: 55 days

Annual interest charged after interest-free days: 22%

1. What is the due date?
2. What is the closing balance on 30 Aug?
3. What is the minimum payment due on due date?
4. If only minimum payment is made on due date and there are no further transactions, what is the balance at 30 Sep?

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You might find the following videos helpful related to this section:

3G Credit Cards (1 of 5)

by Mr Bodgers (click to view channel)

Explains the pros and cons of credit cards and discusses the terminology used.
3G Credit Cards (2 of 5)

by Mr Bodgers (click to view channel)

Explains how to calculate credit card interest and also discusses the difficulty in doing this since it is different from one bank to the next.
3G Credit Cards (3 of 5)

by Mr Bodgers (click to view channel)

Explains how to make calculations involving interest free days.
3G Credit Cards (4 of 5)

by Mr Bodgers (click to view channel)

Explains how to solve a basic credit card problem using the compound interest formula.
3G Credit Cards (5 of 5)

by Mr Bodgers (click to view channel)

Explains how to solve a more complicated credit card question using the compound interest formula.
3H Credit Card Statements

by Mr Bodgers (click to view channel)

Explains how to solve problems using a credit card statement.
3I Credit Card Fees

by Mr Bodgers (click to view channel)

Explains how to solve a problem involving credit card fees.

The following is the type of questions you can expect in exam:

Study notes of this section and other resources can be accessed here:

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