Methods for Charging Interest:
Average Daily Balance: The sum of the daily outstanding balances is divided by the number of days covered in the cycle to give an average balance for that period. This amount is multiplied by a constant factor to give an interest charge.
Adjusted Balance: The balance at the end of the billing cycle is multiplied by a factor in order to give the interest charge.
Previous Balance: The reverse happens: the balance at the start of the previous billing cycle is multiplied by the interest factor in order to derive the charge.
Credit card holders should be aware that most US credit cards are quoted in terms of nominal APR compounded monthly, which is not the same as the effective annual rate (EAR). Despite the "Annual" in APR, it is not necessarily a direct reference for the interest rate paid on a stable balance over one year. The more direct reference for the one-year rate of interest is EAR. The general conversion factor for APR to EAR is EAR=(1+APR/n)^n-1, where n represents the number of compounding periods of the APR per EAR period.
Current US credit card interest rate averages
Monthly UK Debt Statistics Includes credit card rate averages
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