When do finance charges on credit cards apply?

Question

I heard that as long as I pay in full for the billing cycle, I will avoid finance charges. Is that true?

Answer 1

Yes, that absolutely is true. If you pay the full balance each billing cycle and the payment is received before the due date then you will incur no finance charges.  In that situation all you have to worry about is whether the card has an annual fee (which is not a finance charge obviously).  There are plenty of good cards that do not charge a fee and and you can go with any of them.  Personally I use a Citibank card but don't be biased by that, there are plenty of good ones around. I think you can go to bankrate.com to shop around.

I have not paid a cent to Citibank in 15 years of using my card, but in addition to that I get cash back every year, so it is the opposite - they are paying me.  There are other cards than Citibank that do this too but I am only familiar with Citibank personally.  I think Bank of America has one too and probably many others.

Answer 2

Depends on your specific agreement with your particular credit card company.

Read the fine print on that multi-page document they sent you when you first got your card. I'm sure it's spelled out there somewhere.

Answer 3

Usually, if you pay for purchases in full every month, you will avoid finance charges.  However, if you take a cash advance, finance charges apply from the day the advance is taken until it is paid in full.