Have you ever used your credit card to buy something and then later found out that there is an additional fee in your statement? It may seem like a small amount, but it can be a burden for your finances if you don’t pay it off on time.
If you are facing this problem then it is better that you should read this post as it will give you all the information about the finance charge on a credit card.
Let’s discuss what a finance charge on a credit card is:
It is the fee charged by the bank or the credit card company when you use your credit card for any purpose. The amount of this fee depends on the amount you use your credit card.
The finance charge is usually added to the total amount of your bill and the total amount is the amount of your transaction plus the finance charge.
So, if you make a purchase using your credit card and you are charged $300, then you will get a bill with the total amount of $600.
What is the purpose of adding the finance charge?
There are many reasons why the bank or the credit card company adds the finance charge on your statement.
It may be for:
To cover the cost of processing your transaction
To cover the cost of the cardholder protection plan
To cover the cost of fraud prevention
To cover the cost of credit monitoring
To cover the cost of customer service
Conclusion:
The finance charge is not a good thing for your finances because it will increase the amount that you have to pay every month. So, if you don’t want to add to your debt then you should avoid using your credit card to buy anything. You can use it only for emergencies and for paying your bills.