Past due balance method

Definition:

A method for calculating financial charges that charges no interest on a balance as long as that balance is paid off within a pre-determined time period; the balance remaining after the interest-free period is over is then considered "past due," and is penalized by the application of an interest rate. The past due balance method is applied to both credit card and charge accounts.

Investing Essentials


Copyright © 2011 Campbell R. Harvey, Professor of Finance, Fuqua School of Business at Duke University

Term of the Day

Tax differential view (of dividend policy)

The view that shareholders prefer capital gains over dividends, and hence low payout ratios, because capital gains are effectively taxed at lower rates than dividends.

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