A technique for calculating finance charges (such as in a bank account, charge account, or credit card account) based on the account balance remaining after adjustments are made for payments and credits during the billing period. Interest charges are usually lower under this method than under other methods, such as average daily balance and previous balance methods.

A calculation used by the credit card company to determine finance charges. They take the balance at the beginning of the current billing period and subtract any payments and credits received during the current billing period. The resulting total is used to compute any finance charges.

A way to compute finance charges in which creditors add finance charges after subtracting payments made during the billing period