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The average daily balance method is one of the ways that the finance charge on your credit card may be calculated.
The credit card company issuer divides the balance you owe each day by the number of days in your billing cycle and multiplies the result by the interest rate to find the finance charge for each day in the period.
If this is the method your creditor uses, the larger the payment you make and the earlier in the cycle you make it, the smaller your finance charge will be.Yahoo Finance - Cite This Source - This Definition
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