Minimum finance charge

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Minimum Finance Charge

A fee on some credit cards that one must pay each billing period unless charges to the credit card for that billing period exceed it. For example, suppose the minimum finance charge is $1 per month. If one does not use the credit card for the month, one must still pay the credit card company $1. On the other hand, if one charges $10 to the card for the month, the minimum finance charge is waived and one must only pay the $10 (plus any applicable interest).

Minimum finance charge.

A minimum finance charge is a fee collected by a credit card issuer each billing period. It applies when the actual finance charge you owe isn't equal to or larger than this minimum.

For example, if the minimum finance charge is 50 cents, and you owe $5 in finance charges, the minimum would not apply. But if you had no other finance charges, you'd owe the 50 cents.

Not all issuers impose a minimum finance charge, so if you regularly pay your bill in full and on time, you may prefer an issuer who does not charge this fee.

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References in periodicals archive ?
Credit unions that issue credit cards are more apt to market to college-educated people, avoid assessing minimum finance charges and embrace lower minimum payments, among other things, according to a new CFPB study.
In its examination of cardholder agreements, the CFPB also found that large and subprime issuers generally assess minimum finance charges.
He noted that credit card applications and solicitations contain a "disclosure" box that outlines the following information: the annual percentage rate (APR), annual and other fees such as minimum finance charges or transaction charges, the terms of the grace period, the balance calculation method, and, where applicable, cash advance, late and over-the-limit fees.

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