How to Avoid Finance Charges on Credit Cards

Credit cards are any easy way to get what you want when you want it, even if you don't have the cash on hand. Credit card companies make their money from customers who carry balances on their credit cards by charging interest, at varying rates, as well as finance charges on top of the interest.

Difficulty: Moderately Easy

Instructions

1. Make a budget with your income and expenses detailed. Knowing how much money you have available each month to pay toward your credit cards can aid in avoiding finance charges.

2. Prioritize your credit card payments according to interest rates on each card and total balances due. Pay more money toward the highest rate credit cards first to avoid the biggest finance charges being imposed.

3. Pay your credit card bill by the due date, allowing time for your payment to be credited. Credit card companies may not process payments immediately upon receipt, so sending your payment 1 week in advance--or scheduling your payment online to be sent one week in advance--can help you avoid periodic finance charges and late payment fees.

4. Contact your credit card company to ask about waiving your finance charges. If you're not able to pay the full amount due on a credit card that is accruing interest, and if you have a good credit history with the credit card company, they may be willing to forgo any finance charges.

5. Consider transferring your credit card balances to a credit card that offers 0 percent. To avoid finance charges, apply for a new credit card with a 0 percent promotional interest rate on balance transfers and transfer your remaining balance to the new credit card. Your current credit cards may have promotional rates available, so be sure to check with them too.

Tips & Warnings

• Most credit card companies charge a balance transfer fee. You're going to want to determine the cost effectiveness of transferring your balance, because the finance charges may be lower than the transfer fee.
• If you transfer your balances to a credit card with a 0 percent promotional rate, be certain to pay it off or transfer it again before the promotion expires, because some credit cards seek payment for the interest that accrues during the promotional period.