Jack and Jill applied for the same credit card from the same bank. The bank checked both of their FICO scores. Jack had an excellent credit rating, and Jill had a poor credit rating

Jack was approved for a card with an APR of 12%. What was his monthly periodic rate?

Jill was approved for a card with an APR of 21%. What was her monthly periodic rate?

If each of them had an average daily balance of $700 and had to pay a finance charge, how much MORE will Jill pay than Jack?

a. Jack's monthly periodic rate = 1%

b. Jill's monthly periodic rate = 1.75%

c. Amount paid more by Jill than Jack = $5.25

Step-by-step explanation:

a. Jack was approved for a card with an APR of 12%. What was his monthly periodic rate?

Jack's monthly periodic rate = Jack's annual percentage rate (APR) / Number of months in a year = 12% / 12 = 1%

b. Jill was approved for a card with an APR of 21%. What was her monthly periodic rate?

Jill's monthly periodic rate = Jill's APR / Number of months in a year = 21% / 12 = 1.75%

c. If each of them had an average daily balance of $700 and had to pay a finance charge, how much MORE will Jill pay than Jack?

Jack's finance charge = Jack's monthly periodic rate * Average daily balance = 1% * $700 = $7

Jill's finance charge = Jill's monthly periodic rate * Average daily balance = 1.75% * $700 = $12.25

Amount paid more by Jill than Jack = Jill's finance charge - Jack's finance charge = $12.25 - $7 = $5.25