Section 5.3 Credit Cards

The most common type of loan available to a consumer is a credit card. A credit card allows a consumer to borrow money to pay for things. The card comes with a limit which the borrower can not borrow more than. Interest is charged on what is borrowed in several different. The interest charged is called a finance charge.

Picture of credit cards
Lotus Head from Johannesburg, Gauteng, South Africa [CC BY-SA 3.0 (]

Our goals for this section are to

  • Compute payments for an add-on loan.
  • Compute finance charges on a credit card using the unpaid balance method.
  • Compute the average daily balance to determine credit card charges.

Use the workbook below to help you accomplish these objectives.

Section 5.3 Workbook (PDF) 11/2/19 

Practice Solutions