What is Calculating the Finance Charge on a Credit Card?

Calculate the finance charge on a credit card balance of $3,299.19 at a monthly rate of 1.2% is the finance charge charged on credit card transactions.This post never actually worries about what Calculate the Finance Charge on a Credit Card is or how it works. It’s all about the harsh truths of this economic burden.

What will you learn from this article?

It would depend on your degree of motivation, but if you read through to the end, we sincerely hope that you walk away with at least one thing in mind that will help make your life easier in regards to calculating finance charges and/or avoiding them altogether!

First, though, we’ll define what the finance charge on a credit card is with one of its two most popular methods. “Finance charge” and “Credit card transaction” are two of the most abused terms in the financial world. There are some cases in which they mean the same thing, but this article will deal with cases in which they don’t. The term “finance charge” is used when you make purchases on a credit card and it is calculated based on credits or debits to your account during that month. During this time you owe money to someone else and they decide how much money to charge you for that month’s expenses.


If you pay your credit card bill monthly (as most people do) then the finance charge is profit for the credit card company. If you pay it off at the end of every month so that no finance charge is accumulated, then the finance charge is simply money lost to interest on your part. The word “credit” as used here means an amount added to a total as opposed to a unit of value. It doesn’t mean that once a month you are given a freebie gift by your provider. Because credit cards like American Express, Visa and MasterCard have different rates of interest between the three they can not take advantage of bank accounts with higher interest rates so they have to make up those extra profits elsewhere…enter the finance charge.


Since calculating the finance charge is more of a convenience than a necessity (for making payments) most companies will allow you to ignore it. It is calculated on the total amount you spend through your card in one month, not just the amount you spend above what you have in credit. The finance charge can be lumped into one bill at the end of the month or it can be broken down and listed individually with every purchase.

Most providers will also tell you that this interest rate is only applied to your current debt, meaning purchases made after this interest rate was put into effect will only be subject to this interest unless elsewise specified. Most providers will tell you this however and some may not be as clear cut on this point as others. This can cause confusion as to what will come back to haunt you later on in life.

The method:

An easy way to calculate how much money a finance charge would be is by using the following two simple equations. As you can see, it’s not a difficult concept. The problem with the equation is that it doesn’t let you know if the finance charge is too high or too low. It assumes that there are no other expenses (like insurance) thrown into your bill, but there always are and they can add up pretty fast if not accounted for.


Many credit cards include the fewest amount of money in your account to start with (the difference between what’s owed minus the balance on your bill) and any minute expenses can quickly eat away at those slim profits cc fullz.


The biggest disadvantage is that you may not always be able to tell how much money the finance charge will end up being. For example, if you already have a $300 balance and they put $50 into your account, then it’s possible that you could end up paying several hundred dollars more than if they didn’t.

As we mentioned before, this article is not concerned with how to calculate the finance charge on a credit card or how it might be used in your life so we won’t use too many of these words in the article. Those looking for more information are encouraged to research their own situation and make use of the resources at this link:  http://www.brutaltruths.com/calculate-finance-charge/. We will go over a few other points about money, interest and debt and hopefully get you thinking about your finances a bit more carefully. The term “finance charge” is used when you make purchases on a credit card and it is calculated based on credits or debits to your account during that month. It could also be referred to as “credit” when used as such. The interest rate charged by your provider could also come under this name.


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