willingly pay the "extra" interest to do better business. Much confusion is caused by and much mis-information given about this method of calculating interest. Because of its complexity for consumers, advisors from Motley Fool (2005) to Credit Advisors (2005) advise consumers to be very wary of this method (unless they can analyze it and achieve true value from it). Despite the confusion of variable interest rates, the bank using this method does have a rationale; that is it costs the bank in strategic opportunity costs to vary the amount loaned from month-to-month, because they have to adjust assets to find the money to loan when it is suddenly borrowed, and find something to do with the money when it is paid back. In that sense, the two-cycle average daily balance can be likened to electric charges for industrial clients, in which the charge is based upon the peak usage rather than the actual usage. And, in fact, this method of charging interest is often used for business cardholders as stated above. These accounts often have much higher credit limits than typically consumer accounts (perhaps tens or hundreds of thousands instead of just thousands). Daily accrual The daily accrual method is commonly used in the UK. The annual rate is divided by 365 to give a daily rate. Each day, the balance of the account is multiplied by this rate, and at the end of the cycle the total interest is billed to the account. The effect of this method is theoretically mathematically the same over one year as the average daily balance method, because the interest is compounded monthly, but calculated on daily balances. Although a detailed analysis can be done that shows that the effective interest can be slightly lower or higher each month than with the average daily balance method, depending upon the detailed calculation procedure used and the number of days in each month, the effect over the entire year provides only a trivial opportunity for arbitrage. Methods and marketing In effect, differences in methods mostly act upon the fluctuating balance of the most recent cycle (and are almost the same for balances carried over from cycle to cycle. Banks and consumers are aware of transaction costs, and banks actually receive income in the form of per-transaction payments from the merchants, besides gaining a new loan, which is more business for the bank. Therefore, the interest charged