Defining Credit Card Costs
Posted at by ifydcat on category CreditOther than the actual charge from each purchase, there are other fees associated with the use of a credit card. The total balance you will pay on your credit card account each month will be affected by these other costs. The annual fee, the APR, the late payment fee and the finance charge are the common credit card fees found on your monthly statement from time to time. The finance fee is added to it every month while the other fees will be added less frequently.
The finance charge of the credit card will be the dollar amount you have to pay to the credit card provider for the use of their lines of credit to make purchases. The amount you will be paying in finance charges is dependent on the outstanding balance left on the credit card and the APR on the card is the basis for figuring what the finance charge is. Your individual credit card company will in most cases have its own policies and approach in calculating the finance charge on your card.
Your outstanding balance on your credit card may be calculated during one billing cycle or within two billing cycles so you need to understand how your credit card company calculates this balance.
There are three types of balances which are used to figure the amount of your annual finance charges and these three balances are the adjusted balance, the average daily balance, and the previous balance. If you have new or recent purchases, the common factor of these balances, is that you have to decide if these purchases will be counted as part of the relative balance on your credit card. The decision in this matter will be the key to figuring the credit card finance charge. A variation in the finance charges can be dependent on the billing cycle and based on the carry-over balance and the timing of different purchases and payments.
Cards that operate under the minimum finance charge policy are provided by many of the credit card companies. A flat rate of this type for the finance charges each year will not vary or change because of differences in the cards balance each billing cycle. The credit cards minimum finance charge will go into effect when the card has a carry-over balance that goes into the next billing cycle.
If you want to keep using a credit card to make purchases it is a necessity to pay the unavoidable costs of the credit card finance charges. It is very important to have some idea or even a working knowledge of what will affect the finance charges that are added to the balance you will have to pay on your credit card. Being charged an unreasonable fee for something you dont want is unacceptable and you need to know what to do in such a circumstance. In order to know what to be aware of on your monthly statement, you should invest some time in the examination of your credit card terms and uses.
Finance charges which cause an increase in the balance you will have to pay should be something you are aware of on the credit card you originally chose because of its reasonable rates and terms.
Visit JSNet.org for more information on the best credit cards such as cash back credit cards along with many great articles including ‘Controlling Your Credit Cards‘, visit today to read more of these great credit card articles!