True or False? A finance charge is a cost for the convenience of borrowing money.

True. A finance charge is a cost for the convenience of borrowing money.

Finance charge is usually encountered in credit card billing. Majority of finance charges are charged when credit card holder does not pay his or her outstanding balance before the due date.

To avoid having a finance charge, one must always pay his or her credit card balance before the due date. Always pay the total amount due. Any amount not paid after the due date will be the basis for the computation of the finance charge.