Balance Computation Method
|The balance computation method is used to determine how interest on your account is calculated. There are a variety of methods. The most common method used is the Average Daily Balance.
To calculate this:
Balance x APR x # of days in the billing cycle
# of days in the calendar year
See if you can calculate Jerome’s Average Daily Balance. He has a balance of $200, an APR of 10 percent, and 30 days in the billing cycle. There are 365 days in the year. What is his Average Daily Balance?
200 x 0.10 x 30
Jerome’s Average Daily Balance is $1.64.
You can see how important it is to read all disclosures to make sure you understand the terms before you sign up for and accept a credit card offer.