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How to Avoid Credit Card Finance Charges

what is a finance charge on a credit card

By LaToya Irby. Credit/Debt Management Expert

Welcome to's Credit/Debt Management site, led by your guide, LaToya Irby. LaToya has been the credit and debt management guide since 2007. Read more

A finance charge is the fee you pay for carrying a balance on your credit card. Paying finance charges increases the cost you pay for having a credit card, especially if you never completely pay off your balance. You can avoid finance charges on almost all credit cards, but it's all about the timing and amount of your credit card payment.

How to Avoid a Finance Charge

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Your credit card has a grace period. which is typically between 21 and 25 days and listed on the front or back of your billing statement. that allows you to pay your full balance and dodge finance charges. Your statement may even include a disclosure stating the date by which your payment must be received to avoid finance charges. If you pay just part of your balance, then your next billing statement will have a finance charge.

Finance Charges You Can't Avoid

If you had a balance at the beginning of the billing cycle. you may not be able avoid a finance charge.


typically only get a grace period only when your previous balance was paid in full and you started the billing cycle with a zero balance.

Unfortunately, you may not be able to avoid finance charges on all types of balances. Balance transfers and cash advances don't have a grace period, so finance charges start accruing as soon as the balance hits your card. When it comes to these types of balances, the best way to avoid a finance charge is to stay away from those transactions completely. The exception is when your credit card has a 0% interest rate promotion, but these rarely apply to cash advances.

During a promotional period. you won't receive a finance charge even if you don't pay your balance in full. However once the promotional period ends, any remaining balance will start accruing finance charges at the regular APR.

Deferred interest promotional offers backdate interest - charge the full finance charge from the start of the promotional period - if you don't pay the balance before the promotional period ends. Always read the terms of your promotional offers to know whether you need to pay off the full balance before the end of the promotional period to avoid paying finance charges on the balance.

Category: Credit

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