Motley Fool’s You Have More Than You Think. The creators of one of the most popular financial stock market sites, www.fool.com, brothers Tom and David Gardner also wrote the New York Times Bestseller You Have More Than You Think. The Gardner brothers’ book aims to show how even inexperienced investors can invest the smallest amounts of money and still make a profit. Their far-from-foolish advice includes how to reduce your debt and find money to invest, how to find the best investments, how to manage your 401(k), and more. As with most of their writing, this personal finance book is a fun and easy to read.
If you continued making minimum payments and no additional charges on this account, you’d pay $18.00 in finance charges over the course of a year. Why Does the Billing Cycle Matter? Credit card companies state your interest rate in terms of an annual percentage rate, or APR, to make it easier to compare various credit cards and loans. However, you are not charged interest on an annual basis. You’re charged interest periodically based on your billing cycle. Including the billing cycle in the finance charge calculation ensures you are charged interest only for that specific period of time.
The double billing cycle uses the average daily balance of the current and previous billing cycles. This is the most expensive way finance charges are calculated and is unfair to cardholders because it charges interest on balances that have already been paid. Fortunately for credit cardholders, the double billing cycle method of calculating finance charges was outlawed with the passing of the Credit CARD Act of 2009.
Calculating the Average Daily Balance
Because there are so many finance magazines on the market, selecting the right ones to read regularly may seem daunting. I have compiled a short list that will get you headed in the right direction on your path to mastering the basics of investing and personal finance. Spend a few hours per month and you’ll pick up knowledge at a fast pace. Browse through the selection below and find one that fits your reading style.
How Much Is the Finance Charge? Finance charges are calculated each billing cycle based on your APR and credit card balance, so your exact finance charge will typically vary from month to month. Creditors have different methods of calculating finance charges based on how they calculate your balance. Credit card issuers may calculate your finance charge using your daily balance, an average of your daily balance, the balance at the beginning or end of the month, or your balance after payments have been applied. It’s now illegal for credit card issuers to charge a new finance charge on a balance you paid off in a previous billing cycle.
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