Security Bank Credit Card Finance Charge: Understanding the Ins and Outs

What is a finance charge?

A finance charge is a fee imposed by credit card companies on unpaid balances. It is typically calculated as a percentage of the outstanding balance and is charged monthly.

How is the finance charge calculated?

The finance charge is calculated using a formula that takes into account the annual percentage rate (APR) and the average daily balance. The APR is the interest rate charged on the unpaid balance, and the average daily balance is the average of the daily balances over the billing cycle.

When is the finance charge applied?

The finance charge is applied to the unpaid balance at the end of each billing cycle. If you pay your balance in full by the due date, you will not be charged a finance charge.

How can I avoid paying finance charges?

There are a few ways to avoid paying finance charges on your credit card:

• Pay your balance in full each month.
• Pay more than the minimum payment each month.
• Transfer your balance to a credit card with a lower APR.

What if I can't afford to pay my balance in full?

If you can't afford to pay your balance in full, you may want to consider a balance transfer credit card. These cards allow you to transfer your balance from a high-interest credit card to a low-interest credit card. This can save you money on interest charges.

Conclusion

Finance charges can be a significant expense if you carry a balance on your credit card. By understanding how finance charges are calculated and how to avoid them, you can save money and improve your financial health.