If you carry a credit card rather than paying every month, then you must have seen finance charges on your credit cards. Finance Charges? What are they and how they get added to your balance? All these questions may be a big surprise for you. However, it becomes more difficult for students who have to write an assignment on finance Charges. They generally do not aware of this topic and they have no idea how to write information-rich content on this topic. BookMyEssay understands the need of students and offering them finance assignment help at a pocket-friendly cost.

What are Finance Charges?

Finance charges refer to the balances of the credit cards which are due and are not paid until the grace period. As we know, almost all credit cards come with a grace period but these charges aren’t fat-free. Instead, finance charges are measured for each billing cycle, based on interest rates and the amount of balance present in your account. Generally, it has seen that the finance charges get higher with the balances and interest rates.

Calculation on credit cards is different for distinct charges. Now you want to determine, how the creditor calculated finance charges on your balance, then look at the billing statement that is recently used. Once you have seen that statement, you get an idea about the process of your credit card issuer, then you can easily minimize your finance charges without any hassle. No matter, how your creditor calculates finance charges, you can simply avoid all these by paying interest on your balance each month.

There are a few ways through which finance charges can be calculated.

1) Adjusted Balance– This method begins with the balances that are available at the beginning of the billing circle. Also, minus any payment that you have done during the whole process of billing. In this method, purchases are not included. All in all, you can say the method of Adjusted Balance leads to a minimum finance charge.  Most of the creditors do no use this method as they do not find this method beneficial for calculating finance charges.

2) Average Daily Balance – It uses the method of the average of balances. In this, the due or remaining balance of each day is added in one and divided by the days of the month which are marked in your billing cycles. Sometimes, new charges are excluded from the overall calculation. This method is generally used for the calculation of finance charges. Now, the problem arises with how to minimize all these charges. So, if you observe that your creditor calculates your balance using this method, then lessen your charges by paying all balances earlier.

3) Daily Balance– If you talk about this method, then it is quite similar to the above-mentioned method, that is, the Average Daily Method. It used all the balance of each day during the billing circle. In this, a balance of each day multiplied by the rate that is used daily to find finance charges on daily basis rather than on averaging balances that are present in your account. For the billing process, charges on each day are totaled.

4) Double Billing Cycle– This technique works upon the average daily balance method which is discussed above. It basically covers the balance of the previous as well as current billing cycles. This is considered to be one of the most expensive ways of measuring charges and fortunately, when the Credit Card Act of 2009 is passed, these practices outlawed.

5) Ending Balance– The ending balance method of calculating finance charges uses balance at the beginning of the billing process, subtracting payment plus finances charges that are formed during your billing circle- especially at the end. In this practice, the finance charges are not affected by the numbers of the day. However, having a high balance at the end increases the charges.

All these methods need to understand more clearly by the students who are making an assignment on this topic. Hire a Finance research paper and reduce your pressure.

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