BANKING AFFAIRS

Detailed explanation-1: -The term “previous balance method” describes one of many methods for calculating interest payments that are used by credit card companies. Under the previous balance method, the amount of interest charged each month is based on the balance of debt outstanding on the card as of the beginning of the previous month.

Detailed explanation-2: -Most credit cards calculate your interest charges using an average daily balance method, which means your interest is compounded and accumulates every day, based on a daily rate. In other words, every day your finance charges are based on the balance from the day before.

Detailed explanation-3: -declining-balance method Interest calculation method in which interest is assessed during each billing period (usually each month) based on the outstanding balance of the installment loan that billing period.

Detailed explanation-4: -When you receive your bill, there will be two balances listed: current balance and statement balance. A current balance is the total amount of money you currently owe on your credit card. Meanwhile, a statement balance is made up of all the charges you made during the last billing cycle.

Detailed explanation-5: -To calculate a credit card’s interest rate, just divide the APR by 365 (days in a year). Multiplying this rate by your average daily balance over the course of a billing period will tell you how much interest you’ll be charged every day when you carry a balance from month to month.