I'm looking for guidance on implementing this law. Based on my reading of it, I should calc the interst charge based on the avg daily balance for the billing cycle and only on the days in the cycle (vs. 365 days in the year).

For example, interest rate is 5%. The avg daily balance is $5000. The billing cycle is 30 days.

How do you handle an interest rate change during the cycle?

Do I get to choose between a and b below? Do I have to select the lesser charge of the two?

I'm confused... I know other states have similar laws. I would appreciate any assistance.

16a-2-402: (UCCC) Consumer loans pursuant to open end credit; allowable charges per billing cycle. (1) This section applies only to consumer loans pursuant to open end credit.
(2) A charge may be made in each billing cycle which is a percentage of an amount no greater than:
(a) The average daily balance of the account, which is the sum of the actual amounts outstanding each day during the billing cycle divided by the number of days in the cycle;
(b) The unpaid balance of the account on the last day of the billing cycle.
(3) If the billing cycle is monthly, the charge may not exceed 1/12 of the annual rate agreed to by the consumer. If the billing cycle is not monthly, the maximum charge is that percentage which bears the same relation to the applicable monthly percentage as the number of days in the billing cycle bears to 30. For the purposes of this section, a variation of not more than four days from month to month is "the last day of the billing cycle."
History: L. 1973, ch. 85, § 28; L. 1999, ch. 107, § 16; July 1.

Look at the commentary to 16a-2-202. Especially Comment 2. Here is the link to the whole KS UCCC with comments:

www.osbckansas.org/DOCML/DOCMLLaws&Regs/cmlksa7-10.pdf

Thank you so much for the reference. Comment 2 is exactly the information I needed.