As we know that the credit card issuers or the banks provide credit cards in order to make the profit from the interest from the cardholders who don’t pay money in return to the bank in time, so the cardholders need to pay interest over the time the money remains borrowed, this is the deal which you guys all cardholders already know

But how many know about the method of charging the interest? I would love to tell you about it. There are about four method of charging the interest which many banks are always made.

First is Average daily balance:

This method, the bank calculate and charge the interest from the sum of the daily outstanding balances is divided by the number of days covered in the cycle to give the average balance for that period.

Second is adjusted balance:

The interest is the result from the balance at the end of the billing cycle is multiplied by a factor in order to give the interest charge.

Third is previous balance:

It’s the opposite version of adjusted balance method. Besides to give the interest charge from the multiplication of a factor and the balance at the end of the billing cycle as adjusted balance, the previous balance derives the charge instead.

The fourth one is Two-cycle average daily balance:

In the case, even the sum of the daily balances of the previous two cycles it used, but the interest is charged over the current cycle only.

If you are serious about saving for yourself and your family, it would be a wise move to open a savings account with your trusted local bank. If you have your savings money on hand, you would easily be tempted to use it and buy the things that you want. But if you have it deposited in your bank, you would have to think twice before withdrawing your savings. Have a separate savings account apart from your checking account. You can ask your banker to set up automatic transfer of a certain amount from your checking account to your savings account. You can even ask your employer to automatically deduct your savings from your salary and transfer it directly to your savings account.

The first thing that you need to do in creating a savings plan is to set real goals. Short-term goals would include buying yourself a new laptop or a high-end PDA phone. Long-term goal would be something you want for you and your family on your retirement. Jot down your goals on paper and focus on them. Next, you need to create a timeframe for your goals. This would let you realize if your goals are attainable or not. Do the math and calculate how much you need to save per week to be able to reach your goal within a certain timeframe. You need to keep a record of your expenses and from this list, you can see what things you can cut down on to be able to save you a few hundred dollars per month.