Balances Subject to Interest Charge Clause Samples
The "Balances Subject to Interest Charge" clause defines when and how interest will be applied to outstanding balances under an agreement. Typically, this clause specifies that if a party fails to pay amounts due by a certain deadline, the unpaid balance will accrue interest at a predetermined rate until payment is made. For example, if an invoice remains unpaid past its due date, the overdue amount will begin to incur interest charges as outlined in the contract. The core function of this clause is to incentivize timely payments and compensate the party owed for the delay, thereby reducing the risk of late payments and providing a clear mechanism for handling overdue amounts.
Balances Subject to Interest Charge. (i) For each Balance Type, the Balance Subject to Interest Charges is the Average Daily Balance for such Balance Type. The Average Daily Balance for a Billing Cycle equals the sum of the daily Purchases or Cash Advances balances, as applicable, for each day of the Billing Cycle, divided by the number of days in the Billing Cycle.
(ii) The Purchases balance for each day in the Billing Cycle is computed as follows:
(A) For each day (including the first day of the Billing Cycle), we start with the prior day’s closing balance of Purchases, if any.
(B) For the first day of the Billing cycle, we add any unpaid Interest Charges on Purchases that accrued during the prior Billing Cycle. (This results in the monthly compounding of Interest Charges.)
(C) For each day in the Billing Cycle (including the first day of the Billing Cycle), we add any new Purchases posted to your Account and subtract any payments or credits applied to Purchases. However, we do not subtract a second time any payments or credits that have already been subtracted in step (B) above.
(D) We treat any negative daily balance as $0.
(iii) To get the daily balance of Cash Advances each day: (i) we take the previous day’s balance of Cash Advances (if any); (ii) we add any new Cash Advances; and (iii) we subtract any new payments or credits applied to Cash Advances. For the first day of each Billing Cycle, we also add any unpaid Interest Charges on Cash Advances that accrued during the prior Billing Cycle. (This results in the monthly compounding of Interest Charges.) If a Cash Advance obtained in a Billing Cycle is not posted in that Billing Cycle, we add the Cash Advance to the daily balance on the first day of the next Billing Cycle instead of the day it was obtained. We treat any negative daily balance as $0.