There Is No Way To Avoid The Credit Card Finance Charge

Category: Finance, Credit.

There are other fees associated with the use of a credit card besides the actual charge from each purchase.

The common credit card fees you will encounter at some point are the annual fee, late payment fees, the APR and the finance charge. These other costs can add to the total balance on your account that you have to pay. The finance fee is added to it every month while the others are less frequent. This finance charge will be different depending on the APR or annul Percentage rate of the card. The credit card finance charge will be the dollar amount that you have to pay to the credit card provider for the use of their lines of credit to make purchases. This is how credit card finance charges affect you card balance. The outstanding balance will determine how much you will end up paying in credit card finance charges each year more than the APR will affect it.

Your individual credit card company will have its own policies and approach to calculate the finance charge for your card. You need to understand how your outstanding balance is calculated. You must note that there are three types of balances which are used to figure the amount of your annual finance charges. The outstanding balance on your credit card may be calculated during one billing cycle or within two billing cycles. These balances are the adjusted balance, the average daily balance, and the previous balance. When you have done this, you can then calculate the credit card finance charge. Each of these balances has something in common, in that you will need to decide if new or recent purchases will be counted as part of the relative balance.

The finance charges will vary depending upon the billing cycle based on the carry- over balance and the timing of different purchases and payments. With this type of finance charge the cardholder is given a flat rate for the finance charges each year. Many of the credit card companies provide credit cards that operate under what they call a minimum finance charge policy. This will mean that the rate will not vary or fluctuate because of differences in the card s balance each billing cycle. There is no way to avoid the credit card finance charge. Your minimum finance charge is activated when your card has a carry- over balance that goes into the following credit card billing cycle.

It is a necessary cost which must be paid in order to continue using the convenience of the credit line to make purchases. You should have a working knowledge of what affects the charges that are added to your balance that you will have to pay. This means that it is important to have a good idea of how they work with your particular credit card company. What would you do if you are assessed a wrong amount and then pay for something that is not applicable? You must spend some time studying your credit card terms and uses in order to know what to watch for.

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