Consider the following credit card bank statement. In October, the cardholder was NOT benefitting from an interest free period. In order to not pay interest on purchases of the next statement period, the credit card holder needs to transfer into the credit card account at leastA.$77 as soon as the statement is received. B.$3,868.56 by 14th November.C.$3,868.56 plus any new purchases done in the next statement to bring the balance to 0.D.$77 by 14th November
Question
Consider the following credit card bank statement. In October, the cardholder was NOT benefitting from an interest free period. In order to not pay interest on purchases of the next statement period, the credit card holder needs to transfer into the credit card account at leastA.3,868.56 by 14th November.C.77 by 14th November
Solution
The correct answer is C. $3,868.56 plus any new purchases done in the next statement to bring the balance to 0.
Here's why:
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The cardholder was not benefitting from an interest-free period in October. This means that they were carrying a balance on their credit card, which is subject to interest.
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To avoid paying interest on purchases in the next statement period, the cardholder needs to pay off their entire balance. This includes the current balance of $3,868.56, plus any new purchases they make in the next statement period.
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Simply paying the minimum payment of 3,868.56 by a certain date will not be enough to avoid interest. The entire balance, including new purchases, needs to be paid off.
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Therefore, the cardholder needs to transfer into the credit card account at least $3,868.56 plus the cost of any new purchases they make in the next statement period. This will bring their balance to 0, allowing them to avoid paying interest on their purchases.
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