Credit cards finances charge is the fee you pay for carrying balances on your card. There are various finance charge calculators used by creditors and financial institutions to calculate finance charges in different ways. To know how your creditor calculates your finance charge, look on the back of a recent billing statement. You should find an explanation there. Following are some ways to find out how finance charges are calculated.

1. Adjusted Balance:
   The method of adjusted balance calculates your finance charges using your previous balance and subtracts any payments and credits made during the billing cycle. No new charges are factored into the adjusted balance. To calculate the finance charge, the periodic rate is applied to the adjusted balance. This method which consumer experts say favours the cardholders is also termed as the least expensive ways of calculating finance charges.
2. Average Daily Balance:
   The average daily balance method uses the average of your balance during your billing cycle to calculate your finance charges. Each day’s balance is added together and divided by the number of days in the billing cycle. The higher the payment you make and the earlier in the cycle you make it, the smaller the finance charge will be. This method which is pretty even-handed is the most commonly used method.
3. Daily Balance:
   The method of daily balance uses the actual balance on each day of your billing cycle to calculate your finance charges. Each day’s balance is multiplied by the daily rate and added together. The daily rate applied is 1/365th of your APR. Under this method making payment early in the billing cycle results in a lower finance charge.
4. Previous Balance:
   The previous balance method of calculating finance charges uses the balance at the beginning of the billing cycle which is also the ending balance of the last billing cycle. Charges applied and payments credited to your account are not included. Moreover the number of days in the billing cycle doesn’t affect the amount of the finance charge either. According to consumer’s experts, this method is usually favoured by the card issuer.
5. Double Billing Cycle:
   The double billing cycle method of finance charge calculation uses the average daily balance of the current and previous billing cycles. This is one of the most expensive methods to calculate your finance charges. Double billing method also considers your previous month’s balances. After launching the new credit cards rules, using the double billing cycle method is now against the law.
6. Ending Balance:
   The Ending Balance Method uses the balance at the end of the billing cycle. Based on your payments, credits and new charges, your beginning balance is adjusted. The periodic rate is applied to this new balance. The amount of the finance charge is not affected by the number of days in the billing cycle.