How do you calculate interest on my AvantCard?
We use a method called the average daily balance. We calculate interest separately for each transaction type (e.g. purchases, cash advances, and each promotional balance).
On the last day of the statement period Avant will calculate the interest by multiplying the applicable Daily Periodic Rate by the Average Daily Balance and by the number of days in the statement period for each transaction type. The interest will round to the nearest cent, and added to the transaction type’s balance. The total interest charged for a statement period equals the sum of the interest charge for each transaction type.
What is Average Daily Balance?
The average daily balance totals each day's balance for the billing cycle and divides by the total number of days in the billing cycle.
From the cardmember agreement:
To determine an "Average Daily Balance" for a transaction type, we calculate a daily balance each day of the billing period. For each transaction type, we start with the previous balance, which may include unpaid interest and fees imposed in previous billing periods. Each day, we add any new transactions for each transaction type, which may include fees and interest; subtract any payments or credits for each transaction type; and make other adjustments. (We add transaction fees to the same daily balance as the transaction. We generally add other fees to the daily balance for purchases.) We treat any credit balance as a balance of $0. Then, we add up all the balances for the billing period, and divide the total by the number of days in the billing period. This gives us the Average Daily Balance. This computation method results in compounding the unpaid interest from previous billing periods
What is the Prime Rate and how does it affect the APR of the AvantCard?
The Prime Rate is published by the Wall Street Journal, and is based on the corporate borrowing rates offered by large banks. The Prime rate is not set by the Federal Reserve, but it often changes when the Federal Reserve takes policy actions. AvantCard customers’ Variable APRs are indexed to the current Prime Rate. As the Prime Rate is adjusted, an AvantCard customer’s Variable APR may also be adjusted as set forth in the Cardmember Agreement.
Please note, a customer’s Variable APR will never increase above the cap as indicated in your Cardmember Agreement. Any adjustment in your Variable APR will be visible on your billing statement.