Interest Rates

• A financing fee is largely based on the amount of interest your card charges you, measured as annual percentage rate (APR). Whenever you make a purchase with your credit card, you essentially take out an immediate loan. Your finance charge is the amount of interest the bank charges you for those purchases, which is added to your monthly billing statement.
  
  

Calculations

• Interest is calculated in various ways, depending on the card. Typically, credit cards charge financing fees either monthly or daily. If charged monthly, the financing fee is equal to 1/12 of the APR, while a daily financing charge is equal to 1/365 of the card's APR.
  
  

Purchases and Fees

• Whenever you keep a monthly balance on your credit card and are charged a finance charge, that is added to your balance. When you make your monthly payments, that amount is deducted from the total of your balance plus any interest charged as a financing fee. If you pay your monthly bill before it is due each month, you are usually not charged interest, though some credit card issuers do begin charging you interest the moment you make a purchase.
  
  

Other Fees

• Financing fees are the primary form of interest charged to credit card users, but other fees may also apply. For example, if you accept a credit card balance transfer offer, that offer typically charges you a certain percentage of the amount transferred as a transfer fee. This is a one-time charge that is not considered a financing fee even though it is charged as a percentage of the money transfer.