Estimate the answer by picking the best choice without calculating. The method of calculation most advantageous to the credit card company is the __________.
A) previous balance method
B) adjusted balance method
C) average daily balance method

Question

Quizplus · Accepted Answer

The previous balance method is the most advantageous to the credit card company because the finance charges are applied to the entire balance, including any unpaid interest from the previous billing cycle. This results in higher finance charges and therefore more profits for the credit card company. The adjusted balance method and average daily balance method both take into account payments made during the current billing cycle, which results in lower finance charges for the cardholder.

Estimate the Answer by Picking the Best Choice Without Calculating