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How the average daily balance finance charge works?

The average daily balance finance charge

Find out if your credit card calculates finance charges based on your average daily balance. This means that your finance charges are based on the daily average that you hold in your account. Over the billing period, the daily averages are added together and then divided by the number of days in the billing period to determine interest due. This is more expensive for you than calculating by the adjusted balance method, but less expensive than calculating by the previous balance method.

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