Dennis has a credit card with an APR of 10.14% and a billing cycle of 30 days. The following table shows his transactions with that credit card in the month of November.

Date
Amount ($)
Transaction
11/1
517.87
Beginning balance
11/9
31.63
Purchase
11/23
64.10
Purchase
11/26
65.75
Payment

If the finance charge for November is $3.82, which method of calculating the finance charge does Dennis’s credit card company use?
a.
adjusted balance method
b.
previous balance method
c.
daily balance method
d.
there is not enough information to determine which method was used

Adjusted balance method is a financial accounting method that bases finance charges on the amounts owed at the end of the current billing cycle after credits and payments post to the account.

Though, the payment is not given BUT from the beginning balance and the purchases, Dennis owes a certain amount of money. The finance charge is based on the amount owed by Dennis.

Thus, the method employed by the credit card company is adjusted balance method.

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