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5 Ways Finance Charges Are Calculated

Finance charges are applied to credit card balances that aren't paid before the grace period. Different credit cards calculate finance charges in different ways. To find out how your creditor calculates your charge, look on the back of a recent billing statement. You should find an explanation there.

Below are six ways finance charges can be calculated. Click on the links for a more…

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Adjusted Balance Finance Charge Calculation
The adjusted balance method of calculating your finance charge uses your previous balance less any payments and credits made during the billing cycle.

Ending Balance Method of Calculating Finance Charges
The ending balance method of calculating your finance charge uses the balance at the end of the billing cycle.

Previous Balance Finance Charge Calculation
The previous balance method of calculating your finance charge uses the balance at the beginning of your billing cycle.

Daily Balance Finance Charge Calculation Method
The daily balance method of calculating finance charges uses the actual balance each day in the billing cycle.

Average Daily Balance Finance Charge Calculation
Average daily balance is one of the ways your creditor might calculate your finance charge. Find out how the calculation works.

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