account or signing any other

account or signing any other open-end credit agreement should pay close attention not just to the monthly and annual interest rates but also to the way finance charge is computed.

There are three major ways of calculating a finance charge: "previous balance", "adjusted balance” and "average daily balance”.

Using "previous balance” the consumer (you) receives no credit for payments made during the billing period. The charge is calculated on the closing date of the previous billing period. Stay away from this kind of system.

Using "adjusted balance” method the consumer receives full credit for any payments made during the billing cycle. This is the best method.

Today the "average daily balance” method is used most frequently. It combines both methods mentioned above. The consumer’s balances are a^ded up daily and then divided by the number of days in the billing period, thereby giving the consumer credit for all payments made, but not before they are received.

There is a big difference in the three methods of calculating finance charge.

For example: if the annual finance charge rate is 18 percent a year (I'/j percent a month), and your balance is $300 before any payments, the finance charges are as follows: previous balance $6; adjusted balance $1.50 and average daily balance $3.75.

As the example shows, the consumer should avoid creditors who use the "previous balance" method. More creditors are using the "average daily balance" method. The consumer can only pay sooner in the billing cycle to lower the balance on which the charge will be figured.*

If you need any information concerning this subject or related subjects, please call the extension office at 675-3619.

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William Henry Harrison served the shortest term as president. 31 days in 1841. - ’*vhU*_.Frank.lin Roosevelt - served the longest- 12 years. 39 days.