How to calculate the Finance Charge of credit card using average daily balance?

Could you be so kind to help me with that:





Most of credit card issuers use average daily balance (ADB) to calculate Finance Charge (FC). There are two ways:


1)average daily balance method, including new purchases;


2)average daily balance method, excluding new purchases;


The question is how to calculate the Finance Charge using both ways described above.


Specifications of the Card:


Grace Period(GP) = 0 days.


APR = 18.4%


No of Days in a Billing Cycle (BC)=30





Previous Balance =1051.93$


day1/06-day 16/06 : No activity


day 17/06 : purchase = 257.53$ payment=0


day 18/06-28/06 : No activity


day 29/06 payment=600$


day 30: No activity





According to the bank the charge of credit card for this period is 29.34, but how they arrived to this amount. Thats the question.


Thank you

How to calculate the Finance Charge of credit card using average daily balance?
Unless they charged a fee it looks like they charged a full months worth of interest on your charges for the month. If you add the previous balance to the 257 and the 600 you have 1908 and 18.4% interest on 1908 would be 29.16. for the month.
Reply:well you have to add the purchase to the previous balance, and subract the payment to the previous balance. Report Abuse