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. If you know how your credit card issuer calculates your finance charge, you can estimate your own finance charge and even find ways to minimize the finance charge you pay. Regardless of how your credit card issuer calculates your finance charges, you can avoid paying interest on your balance by paying in full each month. Below are six ways finance charges can be calculated, and one has been made illegal within the past decade. Click on the links for a more detailed explanation including examples of how each finance charge calculation method works. If your credit card issuer calculates your balance using the average daily balance method, you can minimize your finance charges by paying your balance down earlier in the billing cycle.
