How Much Will You Pay

The finance charge--that is, the dollar amount you will pay to use credit--depends on your outstanding balance and the periodic rate in your credit card plan:

What Is the Outstanding Balance?
The outstanding balance can be calculated in several ways, and the method of calculation can make a big difference in the finance charge you will pay:

• Average daily balance method including new purchases. The balance is the sum of the outstanding balances for every day in the billing cycle (including new purchases and deducting payments and credits) divided by the number of days in the billing cycle.
• Average daily balance method excluding new purchases. The balance is the sum of the outstanding balances for every day in the billing cycle (excluding new purchases and deducting payments and credits) divided by the number of days in the billing cycle.
• Two-cycle average daily balance method including new purchases. The balance is the sum of the average daily balances for two consecutive billing cycles. One daily balance, that for the current billing cycle, is calculated by summing the outstanding balances for every day in the billing cycle (including new purchases and deducting payments and credits) and dividing that total by the number of days in the billing cycle. The other daily balance is that from the preceding billing cycle.
• Two-cycle average daily balance method excluding new purchases. The balance is the sum of the average daily balances for two consecutive billing cycles. One daily balance, that for the current billing cycle, is calculated by summing the outstanding balances for every day in the billing cycle (excluding new purchases and deducting payments and credits) and dividing that total by the number of days in the billing cycle. The other daily balance is that from the preceding billing cycle.
• Adjusted balance method. The balance is the outstanding balance at the beginning of the billing cycle minus payments and credits made during the billing cycle.
• Previous balance method. The balance is the outstanding balance at the beginning of the billing cycle.

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