Open-end credit can be used again and again, generally until you reach a certain prearranged borrowing limit. Truth in Lending requires that open-end creditors tell you the terms of the credit plan so that you can shop and compare the costs involved. When you are shopping for an open-end plan, the APR you're told represents only the periodic rate that you will be charged figured on a yearly basis. Creditors must tell you when finance charges begin on your account, so you know how much time you have to pay your bill before a finance charge is added. Creditors may give you a 25-day grace period, for example, to pay your balance in full before making you pay a finance charge.
Creditors use a number of different methods to arrive at the balance.
Adjusted balance method. Some creditors, for instance take the amount you owed at the beginning of the billing cycle, and subtract any payments you made during that cycle. Purchases are not counted. This practice is called the adjusted balance method. Previous balance method.