According to this method, we calculate the interest charges for each balance by applying the “daily periodic rate” for that balance to the “average daily balance” for that balance. We multiply the result by the number of days in the billing cycle. That gives us the total interest charges for that balance for that billing period.
The “daily periodic rate” is a daily interest rate. The daily periodic rate for a given balance is equal to the APR for that balance divided by 365.
We calculate the “average daily balance” for each balance. We do this by starting with the beginning amount of that balance for each day. We add any new charges for that day, add any interest on the previous daily balance if there is one in that billing cycle, and subtract any payments or credits. This gives us the “daily balance.” We calculate the “average daily balance” for each balance by adding all the daily balances for each day in the billing period and then dividing by the total number of days in the billing period. The addition of the prior day’s interest to the daily balance calculation causes interest to compound daily.
We add fees that are specific to a particular charge to the same daily balance as that particular charge. We add all other applicable fees to your purchase balance as of the first day of a billing period.
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