How to Avoid Finance Charges On Credit Card Balance

The rule of thumb when it comes to Avoiding finance charges on a credit card is to pay your balance in full at the end of every month. Every credit card has billing cycle. On one particular day in a month the credit card issuer calculates all the charges that you have made to the credit card and sends the bill to you. From the date of the generation of the bill there is a grace period of 10 to 20 days during which you are supposed to make the payment. The very maximum duration that can elapse between you making a charge and having to pay for it is normally 30 days. By making the complete payment on your credit card bill before the due date you will avoid any kind of interest rates and finance charges being levied on you.

If you revolve the balance by making minimum payments or slightly more than minimum payments, your next bill will include the interest on the balance as well. If the minimum payment due on a credit card balance is nothing but the finance charges and the interest rates. Whenever you make the minimum payment you are only paying towards the finance charges of the credit card and nothing towards reducing the original balance.

You should make a note of the fact that the grace period may only exist on your credit card if the prior balance was zero. If you are rotating a balanced than any other charges that you make to your credit card may be susceptible to finance and interest charges from the day that you made those charges.

They are also other kinds of offers on a credit card like cash advances and installment payments that you will have to pay an interest on. It is commonly advised to avoid cash advances. But sometimes these offers are also good when they charge a minimal rate of interest that is well worth the convenience of having ready cash or paying in smaller monthly installments.