If you want to calculate your own finance charge, you have to know your credit card balance for each day of the billing cycle. While your credit card statement won’t list each day’s credit card balance, you can use your statement (or your online transaction log) to figure out the balance. Start with the balance at the beginning of the billing cycle. Then, add or subtract from the balance each day you have new transaction. Let’s say your APR is 12% and your billing cycle is 25 days long. You started the billing cycle with a balance of $100. On Day 4, you made a $100 purchase. On Day 20, a $25 payment was credited to your account. Your daily balance for each day during the billing cycle would be: Day 1 – 3: $100. Day 4 – 20: $200 ($100 purchase). Day 20 – 25: $175 ($25 credit)
Best for Budgeting: EveryDollar. The EveryDollar app uses the zero-based budget method recommended by personal finance expert Dave Ramsey. The zero-based budget gives every dollar a purpose in the budget, hence the app’s name EveryDollar. A built-in monthly expense tracker allows you to connect to your bank to import transactions to keep up with your spending. You can even split expenses between multiple budget items. The tracker shows you the amount you’ve spent so far for the month and the amount you have left to spend. Through the app, you’ll be able to connect with money management experts who can help you with your financial planning. You’ll be able to access your budget through the app or via a desktop computer. All new users receive a free trial of the premium version of the app. You can permanently upgrade through the app menu.
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The average daily balance method uses your balance during the billing cycle multiplied by the APR for that balance. The average daily balance method can be less expensive compared to some other finance charge calculation methods. Your average daily balance is the sum of your balance on each day of the billing divided by the number of days in the billing cycle. Here is the calculation for the average daily balance method: average daily balance * APR * days in billing cycle / 365
How to Avoid a Finance Charge. Since finance charges are the credit card issuer’s way of charging you for carrying a balance, the simple way to avoid finance charges is to not carry a balance. Paying your credit card balance in full every month will prevent your credit card issuer from adding a finance charge to your balance.