How does the credit card company calculate finance charges?
This is what credit card companies charge you to use credit. They base it on annual percentage rate (APR) and your outstanding balance. Since companies have different ways of calculating outstanding balances (over one or two billing cycles, using average daily balance, etc.), what you end up paying can vary greatly. Some companies also have a minimum finance charge. As you compare credit cards, it is vital that you examine your own spending habits. If you know you will be able to pay off your balances monthly, for example, you should be looking at different cards than someone who only pays the minimum amount each month. What level of interest will cost you less? Consider how much of your bill you plan to pay each month. If you do not plan to pay off your entire balance each month, you may want to look at a card with a low interest rate. If you always pay off your monthly balance, interest rate will not be as important a factor. Some cards offer 0 percent APRs for up to a year when you
