Which of the following calculation methods would produce more interest income for a person who uses his or her credit card very frequently?
A)Average daily balance including new purchases
B)Effective daily balance excluding new purchases
C)Two-cycle average daily balance including new purchases
D)Double declining average daily balance excluding new purchases
E)Annual percentage rate method including new purchases

Question

Quizplus · Accepted Answer

Average daily balance including new purchases calculates interest on the entire balance, including new purchases, which results in more interest income for the credit card company.

Which of the Following Calculation Methods Would Produce More Interest