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Finance Dictionary and Glossary of Investment Terms
Previous balance method
Method of calculating finance charges based on the account balance at the end of the previous month.
A technique for calculating finance charges on a credit card account that takes the outstanding balance at the end of the previous billing period and applies the interest rate to that total. Charges in the current billing period are not included. Interest charges are usually higher under this method than under other methods, such as adjusted balance, and average daily balance methods.
A finance/accounting method that bases costs (and interest) on the amounts owing from the previous time period.