Month: August 2017

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The periodic finance charges are calculated by the following equation: Average Daily Balance x the number of days in the billing period x the Daily Periodic Rate. So if you pay the $ 50 right away by the due date as one lump payment instead of two $25 payments spread out over the month you pay off the balance amount owed sooner. Thus reducing the average daily balance sooner and paying less interest on the remaining balance owed.

The sooner you pay off the balance the less interest you will have to pay and more of your payment will go toward paying off the balance. If you change any one of the parts of the equation then you change the finance charge. by lowering the average daily balance over the billing period you will pay less interest since the balance is lower. The longer you wait in the month to make $25 principal payment the more interest you will pay than if you paid it sooner in the billing period.

I hope this helps!