The usage of the credit card does not come without extra charges. Apart from the regular charges, there is also other fess that you will need to pay. The widespread fees that are charged by the credit card company are the annual fees, late payment fees, finance charges and the APR of which the finance charges are recurrent every month when compared to the other charges and is added to the total amount of loan. It is this finance charges that provides the earnings to the financial institutions, credit card companies and banks.
The credit card companies have different types of finance charges configured depending on the way your use your credit card and according to your personal budgeting. There are separate finance charges for the purchases of different good and other services, high rates of interest for cash advances from a bank or an ATM. The finance charges also hinge upon the nature of your credit card.
Calculation of the finance charges on your credit card
After checking the current balance of your account, the primary ting you need to do is to calculate the amount of interest on the credit card and find the length of the billing cycle of your card. Also find out if the interest is imposed for 360 or 365 days in a year. You can find it from the printed details behind your credit card statement.
Then divide the interest rate by 365 or 360 in accord to your interest rate of the credit card to find the daily interest rate. Multiply this number by the number of days between the billing cycles to arrive at the periodic interest rate.
Now multiply the periodic interest rate by the amount of the balance you are indebted at the end of the last billing cycle. The resulting figure is the amount of the finance charges for the next cycle. If the finance charges are based on the average daily balance, complete the calculations of the yearly interest, daily interest, and periodic interest rate.
For the calculation of the amount of the next bill, add the amount you owed each day of the previous billing period and divide it by the number of days in the billing period.
The author has also rendered many other articles that provide information on mutual fund basics and how the balanced mutual funds work.
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