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).
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

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.

Dictionary of Financial Terms. Copyright © 2008 Lightbulb Press, Inc. All Rights Reserved.
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