Finance Charges

How do credit card issuers calculate the finance charges?

The Average Daily Balance is the method used most often for calculating finance charges on your credit card balance. If you do not pay your bill in full, interest will be charge from the time of purchase. The Two Cycle billing method charges two months of interest when you go from paying the balance in full each month to carrying a balance. Your credit card company may use another formula for calculating the finance charges. The back of your bill will have the exact information and can be most helpful — or give a call to the credit card company that you are considering.


Remember that the best way to deal with finance charges is to pay your balance in full each month.