Credit Card Glossary
Previous Balance
This is one of the three main ways that the credit card companies calculates your finance charges. This is where the credit card company takes your previous month’s statement and multiplies it by your interest rate to arrive at the figure that represents your monthly finance charge.
Obviously this method of calculating monthly interest is more advantageous to the credit card company as using this method also allows the company to charge you interest on balances that you have already attempted to reduce with payments.