Which payment method is considered the most advantageous for cardholders?

The adjusted balance method is advantageous for cardholders because it calculates the interest based only on the balance after any payments made during the billing cycle, rather than on the entire previous balance. This means that if a cardholder pays their balance before the end of the billing cycle, the interest charged will be lower, as it is applied to a reduced amount.

This method incentivizes timely payments, promoting better financial habits while helping cardholders save on interest charges. Additionally, it allows individuals to have a clearer understanding of how their payments impact the overall interest due, fostering more effective budget management.

In contrast, the previous balance method calculates interest based on the balance at the beginning of the billing cycle, which may not benefit those who make payments during the cycle. The average daily balance method takes into account the daily balance over the billing cycle, which can still result in higher interest charges if payments are made. The minimum payment method encourages only small payments, often leading to significant debt accruement due to high interest costs, ultimately making it less favorable for cardholders.