In which method is interest applied only after payments have been made during the billing period?

The adjusted balance method is the correct approach because it calculates interest on the remaining balance after payments have been made during the billing period. This means that any payments you make throughout the billing cycle will reduce your outstanding balance before the interest is applied, leading to a more accurate calculation of interest based on the balance you actually had during that time. This method tends to be more favorable for consumers, as it can result in lower interest charges compared to methods that apply interest to the total balance before any payments are taken into account.

In contrast, other methods, like the previous balance method, apply interest to the total outstanding balance at the start of the billing period regardless of any payments made. The average daily balance method considers the balance on each day of the billing cycle but does so by averaging, which may not reflect the benefits of payments made during the cycle as directly as the adjusted balance method. The fixed rate method, which sets a consistent interest rate regardless of balance changes, does not specifically discuss the timing of payment application, making it less relevant in this context.