• Bank Charges

Bank charges are a way for financial institutions to make a profit by charging their customers a specific amount for the privilege of borrowing money. Credit card companies also follow this practice, and any additional fee that is added to the original amount of a loan or a debt is correctly called a finance charge. The charges usually include the interest that gets added to the balance, service fees for the transactions, late fees, and balance transfer fees.

Bank Charges

If a customer takes out a loan of a thousand pounds from a bank, the financial institution involved then has the legal right to charge interest based on current laws. If the interest rate is fixed at ten percent, for example, then the eventual cost of borrowing the money would be the amount of the loan plus the appropriate finance charge.