Sidney took a cash advance of $200 by using checks linked to her credit card account. The bank charges a cash advance fee of 2 percent on the amount borrowed and offers no grace period on cash advances. Sidney paid the balance in full when the bill arrived. a. What was the cash advance fee? b. What was the interest for one month at an APR of 18 percent? c. What was the total amount she paid? d. What if she had made the purchase with her credit card and paid off her bill in full promptly? Assume the credit card has a 30-day grace period.
Sidney took a cash advance of $200 by using checks linked to her credit card account. The bank charges a cash advance fee of 2 percent on the amount borrowed and offers no grace period on cash advances. Sidney paid the balance in full when the bill arrived.
a. What was the cash advance fee?
b. What was the interest for one month at an APR of 18 percent?
c. What was the total amount she paid?
d. What if she had made the purchase with her credit card and paid off her bill in full promptly? Assume the credit card has a 30-day grace period.
(a) Cash advance fee = Cash advance x cash advance fee
= $200 x 2%
= $4
(b) Interest amount = Cash advance x interest rate x 1/12
= $200 x 18% x 1/12
= $3
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