If creditors add finance charges after subtracting payments made during the billing period, this is called the:
A) APR method.
B) discount method.
C) previous balance method.
D) adjusted balance method.
E) average daily balance method.

Question

Quizplus · Accepted Answer

The adjusted balance method is the only option that takes into account payments made during the billing period when calculating finance charges. The previous balance method (C) uses the balance from the previous billing period, regardless of any payments made. The APR method (A), discount method (B), and average daily balance method (E) all calculate finance charges based on the balance during the billing period, without considering any payments made.

If Creditors Add Finance Charges After Subtracting Payments Made During