In the context of credit card billing, what does the term "interest charges" refer to?

The term "interest charges" specifically refers to the additional amount added to the total balance owed on a credit card based on the outstanding balance and the method used to calculate this amount. When you carry a balance from one billing cycle to the next, the credit card issuer applies a specific interest rate to the unpaid balance, which translates into additional charges. This is often calculated using methods such as average daily balance or previous balance, and the specific terms of the cardholder agreement will dictate how interest is assessed.

Understanding interest charges is crucial for cardholders as it directly impacts the total amount owed and can affect financial decisions, such as whether to pay off the balance in full or over time. Thus, option C correctly identifies the nature of interest charges in the context of credit card billing.