Charges on a Credit Card

A credit card is a tool for financial leverage. It is an available supply of money, on loan, that needs to be paid at some future date with interest. So, when one purchases an item on credit, one not actually pays for the amount of the item but pays for a whole host of other amounts because of the purchase. Here is a brief list of the items charged on the card.

1) Interest

This is the most basic charge imposed by a credit card company on a holder. This is the amount, usually set at a rate, determined as the cost of the money lent to the cardholder for the purchase. Though some may offer 0% interest for a certain period, this is in essence recouped on the lapse of the period and the actual interest rate is imposed.

2) Surcharges

There are many surcharges imposed on a credit card holder. There is the merchant's fee, and if coursed through a bank, a handler's fee is charges. This can be seen when one receives the monthly bill on the card. As required by law, the credit card company must list all the billable charges on the card. If one is quite fastidious, the charges imposed are a t a rate when put together would amount to a plenty sum. So in order to avoid this, limit the use of the card and make purchases more on a cash basis.

So it can be seen that one is lulled to a sense of complacency as to the use of a credit card. In order not to be robbed blind by charges made on the credit card, do limit the use to large expenditures. In this manner, one can determine how one can avoid losing money on credit cards.