Abstract: The finite difference method for the 3-D case is used in this paper for studying the source field effect on the transfer functions and the amplitude ratios of geomagnetic fields, which are often used in the study of earthquake prediction. Several horizontal source field models are studied: in one case the field is assumed to be circularly polarized, and in other cases the field is assumed to be linearly polarized pointing to various directions. We show that, even in the simplest case where the source fields are uniform and horizontal, the amplitude ratio is definitely affected by variations of source fields. However, the single station transfer functions are not affected by changes in the nature of the uniform and horizontal source fields. Employing information on the time variations in transfer functions for monitoring the earthquake precursors is therefore meaningful, especially in the mid-or-low latitude locations where the vertical component of the inducing field is rather small.