Average Daily Balance, Excluding New Purchases
This balance is calculated by adding the outstanding balance for each day in the billing cycle, and then dividing by the number of days in the cycle.
Average Daily Balance, Including New Purchases Which Have a Grace Period
This balance is calculated by adding the outstanding balance (including new purchases and deducting payments) for each day in the billing cycle, then dividing by the number of days. The grace period only takes effect if the balance from the previous billing cycle was zero.
Average Daily Balance Including New Purchases with No Grace Period
The balance from the previous cycle and all new charges in the current billing cycle are included in the balance calculation even if the previous month's balance was paid in full.
Two-Cycle Average Daily Balance Including New Purchases
Several issuers use the two-cycle average daily balance method. It is used primarily to back-charge interest on a balance on which no finance charges were paid (because the previous balance was zero). This method is not favorable to consumers, especially if they are trying to pay off their credit balance. In essence, you must pay off your balance for at least two months to avoid finance charges.
Extra charges may include:
Late payment: Your payment arrives after the due date. When this happens you can lose a low introductory rating or trigger a higher default rate.
Over the Credit Limit: Any amount charged over your credit line will trigger a fee.
Cash Advances: It is not a good idea to use your credit card for cash advances. The interest rate is higher than when you use your card for purchases and there is usually no grace period for a cash advance. Often the interest begins accruing before you even receive the money.
Read the Fine Print after the Disclosure Box: There may be additional fees. Your interest rate may be changed at any time for any reason. For instance, even with a fixed-rate card, the rate can still be increased if you miss a payment.
Utilities, such as Electricity, Gas, and Telephone
Allows you to use the product and then pay at the end of the month. Note these are typically not listed on your credit report, nor do they affect your score, unless you have missed payments are in collections.