Q: How is interest calculated on a credit card?

To calculate the daily balance, we take the beginning balance each day, add new purchases and advances and subtract any payments and credits. Then the daily balances during the billing cycle are added together and divided by the number of days in the cycle to calculate the average daily balance. This average daily balance is subject to finance charges for the billing cycle. If your entire balance of purchases is paid in full within 25 days of your statement closing date, no finance charges will be imposed.

Cash advances and balance transfers are always subject to a finance charge from the date they are posted to your account.