Unpaid balance for a credit card statement

Four numbers, one order of operations. The interest is charged on last month's balance and nothing else.

01 Worked Example Video

▸ VIDEO COMING SOON

A short walkthrough explaining what you need to know and how to solve this question type lands here once it's recorded.

02 What This Looks Like on ALEKS

ALEKS randomizes the numbers each attempt, but the question shape stays the same. Here are three example versions you might see.

The interest

Unpaid balance from the previous month: $3,120.80. The card charges 1.55% monthly interest on it.

How much interest is charged? Type just the number.

The new balance

Same account: previous balance $3,120.80, interest $48.37, purchases $288.35, payments $500.00.

What is the new unpaid balance? Type just the number.

Paying it down

Previous balance $945.50 at 1.89% monthly, purchases $612.40, payments $900.00.

What is the new unpaid balance? Type just the number.

Heads up: Your ALEKS version will use different numbers. The numbers in the practice below are different too — that way you're exercising the move, not memorizing one answer.

03 The Rule

interest = (previous unpaid balance) × monthly rate not the balance after purchases

new balance = previous + interest + purchases − payments purchases and interest up, payments down

The monthly rate is already monthly — do not divide it by 12. And this month's purchases have not been on the card long enough to be charged interest yet, which is why they are added after the interest is worked out.

Common slips

(1) Charging interest on the wrong base. Adding the purchases before taking the percentage overstates the interest. (2) Dividing the monthly rate by 12. It is already a monthly rate. (3) Forgetting to include the interest in the new balance — the problem tells you to. (4) Sign errors: payments reduce the balance, purchases raise it.

04 Practice — Step by Step

Last month's balance, this month's activity

The table shows a summary of Dana's credit card statement for the month of October.

Unpaid balance from September (beginning balance on October 1)	$1,842.60
Purchases made during the month of October	$416.20
Payments made during the month of October	$250.00

(a) The card charges 1.32% monthly interest on the unpaid balance from September. How much interest will this be?
(b) What will Dana's unpaid balance be on her November 1 statement? (Include the interest from part (a), but no interest on the October balance yet.)

Step 1

(a) Which number gets the 1.32%?

Interest is charged on the unpaid balance from September.

Step 2

(a) The interest

1.32% of $1,842.60.

Step 3

(b) Which way does the payment go?

Dana paid $250 during October. In the new balance, that is…

Step 4

(b) The November 1 balance

1,842.60 + 24.32 + 416.20 − 250.00

Step 5

Did the balance go up or down?

She started at $1,842.60 and paid $250. Where did she end up?

Q11 Q13

Unpaid balance for a credit card statement

She paid $250 and owes $190 more