What is Adjusted balance?

Adjusted balance

What is Adjusted balanceAdjusted balance refers to the subtraction of payments or credits that are received during the current billing from the balance at the beginning of the billing cycle. For instance, if the balance in a card in the beginning is $ 1500 during the billing period and the payment of $ 500 is made by the cardholder during the billing period, he will be charged interest only for the remaining $ 1000.

This computation method is said to be very flexible and consumer- friendly. In other words, it is a computation technique for calculating finance charges used by card issuers, banks etc.

In this method, an adjusted balance is determined by deducting all the payments made during the billing cycle from the out standing balance at the beginning of the billing cycle. The advantage is the interest charges are relatively lower in this method when compared to other methods. This method is used in many saving schemes.