A periodic rate finance charge is also known as the periodic interest rate. This rate is used to determine the amount of interest charged during a certain period of time: usually monthly or even daily in some cases. There are two ways to avoid paying periodic finance charges. The first is by applying for a credit card which offers a zero percent interest rate for a specified amount of time. This method is temporary. The only way to permanently avoid paying periodic finance charges is by paying your bill in full each month.
Step 1
Read the terms and conditions that came with your credit card. If you do not have a copy, call the credit card company and ask for one. While you're on the phone with a customer service representative, ask him how finance charges are calculated. Traditionally, interest is calculated on a monthly basis if the bill isn't paid in full.
Step 2
Pay your credit card bill in full each month, preferably before the statement generates. This will prevent finance charges from accruing and will also prevent a balance from being updated with the credit bureaus. By paying this way, you could max out a credit card but if you have the ability to pay it in full before the billing cycle ends, your credit score will not suffer by having a high credit utilization percentage. Remember to make your credit card payment early enough that it has time to post to the account before the due date. Online payments are an effective way to keep track of payments and eliminate the delay that comes with mailing a check.
Step 3
Keep credit card statements and receipts of credit card payments. In the event that a payment was credited to the wrong account, or credited late, you need proof that the payment was made to correct the error.
Tips and Warnings
- Make your payments early and do not exceed your credit limit. Many credit card issuers will increase your interest rate to the default rate when when your payment is late or if you exceed your limit. If you ever carry a balance from month to month, the default rate could cost you a lot of money.
Things You'll Need
- Credit card terms and conditions brochure
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