Posts Tagged ‘Finance Charge’

The first step in doing a credit card payment is to understand your monthly billing. The following are terms you will encounter:

Statement date The date that the bill was printed.

Payment due date this is the day that the cardholder must pay any outstanding balance. Payments made after the said date will be credited, but will also be fined a lateness fee.

Total Amount Due It consist of the unpaid amount from the previous month, as well as purchases, payments and interest charges for the current month. When the cardholder pays this amount on or before the payment due date, no interest charges will be imposed.

Minimum Amount Due this is a smaller fraction of the total amount due. To maintain a good standing with the card company, pay at least this amount, if you cannot afford to pay the total amount due.

Finance charge if the cardholder is not able to pay the total amount due, then he is charged a fee for borrowing money from the company. It is calculated based on the interest rate of the card. For detailed information on how this is calculated, go to http:www.abcguides.comcreditcardscci_faq.htm#finance_charges.

Late charges Paying or not, after the payment due date, is penalized with late charges. Avoid this as much as possible as this is almost 2X the interest rate of the finance charge. Consistently missing payment may lead to cancellation of the card and a bad credit standing.

Having understood the information on your monthly bill, here are simple strategies for paying your credit card charges:

Always pay the total amount due. Paying only the minimum amount due means being charged for a high interest rate on the unpaid amount.

If you cannot pay the total amount due, pay as much as you can above the minimum amount due. This strategy aims to reduce the finance charges that you have to pay for settling partially.

Do partial payments as early as possible (as soon as you receive the billing). Finance charges are based on the unsettled amount and the time it remains unsettled, so the shorter it is, the lower it will be for finance charges.

Some card companies reward loyal cardholders by accumulating points for their spending. Check if reward points can be credited back as payment.

Lastly, pay the total amount due. Just to emphasize the point!

There are many avenues to pay your card bill. Theres the traditional way of waiting in line, or the faster way of paying electronically through your computer, cash machine or mobile phone. With all these conveniences at hand, it is quite unforgivable to miss your payment due date.

Therefore, settle smart: pay the total, pay on time.

Seeing people buying food or shopping clothes using credit cards has been commonplace these days. The phrase “Charge it!” has become a favorite expression of card users, and has been commonly heard in shops, dining places, and elsewhere.

After all, who does not want to use these credit cards? Easy to use, these sleekly-designed cards can be used to buy practically everything in commercial establishments regardless of how much (or less) money does one carry money in his wallet. Short of cash and hungry? No grocery supplies? Going to a party but no money to buy that dress you’ve been drooling for? No problem! Your good ol’ credit can care of that for you. No worries.

Credit Cards: Not Free Money

But wait. A credit card spree may be fun, but that doesn’t free you from responsibilities in paying the expenses you incurred from using your credit card. Credit cards, after all, are interest loans in disguise. Typical credit cards ask for a number of charges, including:

” A finance charge, which is an interest charge for the unpaid portion of your monthly bill;

” An annual membership fee;

” Or if you’re paying after the deadline, there is also a late payment fee which could have a higher interest rate.

In fact, many credit-card holders face credit-related problems. Poor purchasing decisions, lack of information on credit card fees, and disregard for upcoming credit payments are among the reasons why many credit-card users are often hard-pressed in paying their debts. Some are not even able to pay for the actual purchases they made, just barely managing to pay credit card company charges.

Before you get drowned in a sea of debt, here are some tips to help you manage your credit-related expenses:

” Be credit smart. Applying for a credit card application means you are ready to assume the responsibility for paying your credit. You and only you – not your parents, spouse, or whoever – is responsible for that.

” Use your credit cards wisely and sparingly. Remember: Paying goods and services using credit cards are more expensive than using cash or checks. Credit payments include interest and other fees. Use credit cards as sparingly as possible. If you really need to use credit cards, carry only the cards that you will actually use.

” Use credit only if you are sure you can repay it. Paying your debt on a credit card using another does not count.

” Avoid impulse shopping on your credit card.

” Use credit for money emergency only.

” Seek credit counseling as soon you see financial problems on the horizon.