AI-assisted research summary: A bank may charge and collect authorized interest on credit card balances, compute balances in different ways under the written agreement, compound interest, and apply payments in any order, subject to federal law and any payment-allocation exceptions.
A bank may charge and collect the interest charges authorized by § 45-2-1904(a) on each credit extension under the credit card plan from the date the cardholder makes a purchase or obtains a cash advance through the date payment is credited to the account in accordance with applicable federal law. Subject to the terms of the written agreement between a bank and a cardholder, outstanding balances may be computed at the beginning or end of any period or on an average basis for the period. Outstanding balances may include any interest charges and other fees and charges posted to the account. Accordingly, a bank may compound interest charges on extension of credit under this part, on a daily or other basis. For purposes of determining the daily, weekly, monthly or quarterly rate of interest equivalent to an annual rate, the annual rate shall be divided by: three hundred sixty (360), if the written agreement so provides, or three hundred sixty-five (365), fifty-two (52), twelve (12), or four (4), as the case may be, without regard to the effect of leap years, periods of varying lengths, compounding of interest charges or other factors. A billing period shall be deemed to be a month or monthly if the last day of each billing period is on the same day of each month or does not vary by more than four (4) days from the same day. Payments received by a bank under a credit card account may be applied by the bank to purchases, cash advances and/or fees and charges imposed by the bank, in any order, and a bank shall not be required to set forth its payment allocation method in the account agreement or give notice of a change in its payment allocation method, except as required by federal law.