Do I Have to Pay a Finance Charge If I Pay My Credit Card in Full?

Pay your bill as soon as it arrives.

Credit cards provide a great convenience, but they come at a high cost for those who do not pay their balance in full every month. If you pay your credit card balance in full every month, you do not have to pay any finance charges or interest. If you pay less than the total balance, the bank assesses those charges and adds them to your account.

Avoid Finance Charges

Avoiding finance charges is important if you plan to use your credit card wisely. The finance charges on credit cards can really add up, and if you fail to pay your bill in full on a consistent basis, you could end up paying hundreds of dollars in fees over the course of a year. The best way to avoid paying those finance charges is to always pay your bill on time and in full. Track your charges carefully throughout the month so that you will have enough in your checking or savings account to make the payment. Then pay that bill as soon as it arrives.

Statement End Date

If you want to avoid finance charges and interest on your credit card, you need to become familiar with the statement end date on your card. All charges processed after that end date will be on the following month's statement, while all charges incurred before that date appear on the current month's statement. Once you know when your statement closes, you can check your balance and be on the lookout for the bill. Paying the bill as soon as you receive it is the best way to ensure you avoid finance charges, late fees and interest payments.

Due Date

When you receive your credit card statement, either electronically or through the mail, note the due date carefully. The due date should be clearly printed on the front of the credit card statement, close to the amount you owe. Leave plenty of time for the bank to receive and process your payment if you submit it by mail. It can take a week or two for the credit card issuer to receive, process and credit your payment. For faster service, you can log on to your account and pay your bill electronically using your bank account.

Automatic Payments

One way to avoid late payments and the resulting interest charges and fees is to set up an automatic credit card payment from your checking or savings account. If you plan to use this strategy, however, you need to be sure that there is sufficient cash in that account, and that means monitoring your credit card balance on a regular basis. If you do not have enough in your account to pay the credit card balance in full, you could get hit with not only credit card charges but also bank charges for overdrafts and bounced checks as well. An alternative strategy is to set up an email reminder and then log on to the account and pay the balance manually. That way you can check your bank account balance and make sure you can pay the account in full.

References

• CNN Money: What Should Be In Your Wallet