However, if you do not manage to pay for the purchase on the first bill it shows up on, then you will start to incur interest and financing charges. On credit cards, interest is charged monthly, not annually.
Also, as well as interest and financing charges, credit cards can also end up costing you in other fees. Probably the most common expense people incur with credit cards is interest charges, when they become unable to repay the full balance in full each month and instead, allow the balance to carry over to the next month.
But late payment fees are another way that credit cards ending up costing people more than they had imagined. You should always read the credit card agreement carefully to find out how much the penalty fees will be if you fail to make all of your repayments on time. Some credit cards will even alter the interest rate you are charged if you fail to make payments. For example, if you are on a credit card that charges ten per cent annual percentage rate, and fail to make a repayment, the terms of your agreement may provide for the interest rate to be increased to a higher price, for example, twenty-five per cent.
Another way credit cards can end up charging you more than you expected is if you travel abroad. One of the main conveniences of a credit card is that you can use it elsewhere when you visit. However, many credit card companies charge high loading fees for purchases you make while abroad. Not only will they charge you their currency exchange fees, but they will also charge you a percentage of the transaction as another fee.
