When calculating interest on a credit card, which method is most beneficial to a consumer?

The adjusted balance method is considered the most beneficial to a consumer when calculating interest on a credit card. This method takes into account payments made during the billing cycle before interest is applied. Unlike the previous balance method, which calculates interest based on the balance that existed at the beginning of the billing cycle, or the average daily balance method, which smooths out daily balances over the month, the adjusted balance method only considers the balance after payments have been deducted.

By applying the adjusted balance method, the consumer effectively reduces the amount of interest charged because it directly reflects any payments made during the billing cycle. This means that if a consumer makes payments before the interest is calculated, those payments lower the balance on which interest is ultimately charged, resulting in savings. Additionally, this method does not factor in any new charges made during the billing cycle, which further favors the consumer by potentially keeping interest lower compared to other methods that might include new purchases before the interest is calculated.