Problem
On October 23, you plan to purchase a $1,500 computer by using one of your two credit cards. The Silver Card charges 18% interest and calculates interest based on the balance on the ?rst day of the previous month. The Gold Card charges 18% interest and calculates interest based on the average daily balance. Both cards have a $0 balance as of October 1. The closing date is the end of the month for each card.
Your plan is to make a $500 payment in November, make a $500 payment in December, and pay off the remaining balance in January. All your payments will be received and posted on the 10th of each month. No other charges will be made on the account.
Task
1. Based on this information, calculate the interest (in $) charged by each card for this purchase.
2. Which card is the better deal and by how much (in $)?