Question on credit card.

[Pooherino ツ]

So I just got my first credit card last week and been using it a little bit. On my online banking page, there's 3 things, current balance, which is the money I borrowed, available limit, which is the money I have left to borrow, and payment limit, which is I guess the money I have to pay on a specific date.

So let say I owe them $100, and the payment limit is $10, and I don't have $100 at the time of the due date. I can just pay $10 on the due date and not worry about the $90 until the next due date right? And what will the payment limit the next month? will it be $10 again? until I just pay off the $100? Will it affect anything (like will the bank charge me extra) if I just pay $10 now, except for the credit limit (I won't have credit to use more money)?

[49Pigs49]

This is how you go in debt. Just get a debit card because on a debit card you can only spend money you have so you don't have to pay it back. And no debt

[49Pigs49]

And you get late fees for not paying on time so then you owe more

[rcarteraz]

All that's required is the minimum payment amount on the due date listed. This keeps your account in good standing. However, remember that you are paying interest on any balance you have. So next month that $90 is going to be more once interest hits. It's always best to pay off the balance each month. Credit utilization also affects your credit score and generally you never want to be utilizing for than 30% of the credit you have for an account. So if it's $100 you don't want your balance to be over $30. Paying on time and keeping your balance low is the best way to build credit. Also, try to pay as little interest as possible just so that $30 dinner doesn't end up costing you $45. Good Luck!

[Yoinkerman]

So I just got my first credit card last week and been using it a little bit. On my online banking page, there's 3 things, current balance, which is the money I borrowed, available limit, which is the money I have left to borrow, and payment limit, which is I guess the money I have to pay on a specific date.

So let say I owe them $100, and the payment limit is $10, and I don't have $100 at the time of the due date. I can just pay $10 on the due date and not worry about the $90 until the next due date right? And what will the payment limit the next month? will it be $10 again? until I just pay off the $100? Will it affect anything (like will the bank charge me extra) if I just pay $10 now, except for the credit limit (I won't have credit to use more money)?

Basically, yeah.

The bank will charge you interest on any remaining money you carry over to the next month. If you have a higher balance, your minimum required payment will also be higher.

[Pooherino ツ]

Basically, yeah.

The bank will charge you interest on any remaining money you carry over to the next month. If you have a higher balance, your minimum required payment will also be higher.

 

All that's required is the minimum payment amount on the due date listed. This keeps your account in good standing. However, remember that you are paying interest on any balance you have. So next month that $90 is going to be more once interest hits. It's always best to pay off the balance each month. Credit utilization also affects your credit score and generally you never want to be utilizing for than 30% of the credit you have for an account. So if it's $100 you don't want your balance to be over $30. Paying on time and keeping your balance low is the best way to build credit. Also, try to pay as little interest as possible just so that $30 dinner doesn't end up costing you $45. Good Luck!

it says that my purchase rate is 20% sothe next month I will owe them $90 + the 20%? or is the 20% a yearly fee and the monthly interest rate is 1.67%?

[ThomasD]

With most cards, if you do not pay the balance in full, you will acrue interest on the entire balance - not just the unpaid portion.

 

eg. If your statement balance is $100.00 and you only pay $10.00, and your annual interest rate is 18%, your next months balance (assuming you add no more charges) will be $91.50

 

calculated as 100 + ((100 x 0.18)/12) - 10 = 91.5

 

Routinely carrying a balance on an ordinary  credit card is a recipe for financial ruin.  That extra couple bucks doesn't seem like much, but it adds up every month, and so becomes real money real fast.

 

Only charge what you can pay off each month.

[Yoinkerman]

it says that my purchase rate is 20% sothe next month I will owe them $90 + the 20%? or is the 20% a yearly fee and the monthly interest rate is 1.67%?

If its 20% it's an annual interest rate, but it's compounded daily.

No offense, but please look into how interest rates work and how cards work in general, or keep your limit very small ($500). You shouldn't be using a credit card if you don't know how it works.

[Nuluvius]

So I just got my first credit card last week...

 

That was your first mistake.

 

So I just got my first credit card last week and been using it a little bit. 

 

That was the second.

 

My advice is to destroy it as soon as possible. Credit cards exist to facilitate and entice us to live beyond our means and that is what you are doing (what you can only be doing) to own and use one. Trust me, it took me years and cost me literally everything to climb out of a very dark hole.

[Pooherino ツ]

If its 20% it's an annual interest rate, but it's compounded daily.

No offense, but please look into how interest rates work and how cards work in general, or keep your limit very small ($500). You shouldn't be using a credit card if you don't know how it works.

compounded daily meaning they will charge me everyday?

[Thunderpup]

Everyone else has provided some answers you are seeking so I am going to offer my advice from personal experience.

 

Keep the credit card, but use it sparingly.  Having an open credit card will enable you to build credit, but they are super easy to get behind on as you rack up the transactions easy but paying them off while fighting the interest is hard.

 

Your best bet is to see if your bank has a "check card" which basically pulls money from your checking account but has a credit card's logo and can be used just like a credit card providing you have the necessary funds.

[Yoinkerman]

compounded daily meaning they will charge me everyday?

Please look it up or get an appointment at the bank so they can explain it to you.

[WillFromGA]

So, if you don't pay them at all, you get charged with a late fee (usually about $25 even if you owe $.01) plus interest. If you pay the $10, which is the minimum payment, saves you from the late fee, but you still pay interest.

To be honest, you should have looked these things up before getting a credit card. These are basic vocabulary about credit cards.

Word of advice, if you don't have the money in your bank account to pay for, then don't put it on the credit card.

[bob345]

This i my view on credit cards. If you cant afford somthing in cash, dont buy it. Pay your credit card off in full every payment else that is a very good way to end up with a ton of debt.

[Wano97]

That was your first mistake.

 

 

That was the second.

 

My advice is to destroy it as soon as possible. Credit cards exist to facilitate and entice us to live beyond our means and that is what you are doing (what you can only be doing) to own and use one. Trust me, it took me years and cost me literally everything to climb out of a very dark hole.

I think you're a little overreacting... If you know how to manage your money and bills, credit cards are perfectly fine.

[Nuluvius]

I think you're a little overreacting... If you know how to manage your money and bills, credit cards are perfectly fine.

 

Said the 18 year old... don't worry I'm not on the offensive. That was my opinion at around much the same age to be honest - it's simply how they work; they target and exploit the young and naive (amongst others of course).

 

Quintessentially it comes down to this: if you don't have the cash in your account and you lack the cash flow to build it then to rely on borrowing (no matter how you justify it to yourself), you are simply living beyond your means. If you 'know how to manage your money and bills' so well then that simple fact would be plainly obvious to you.

[Wano97]

Said the 18 year old... don't worry I'm not on the offensive. That was my opinion at around much the same age to be honest - it's simply how they work; they target and exploit the young and naive (amongst others of course).

 

Quintessentially it comes down to this: if you don't have the cash in your account and you lack the cash flow to build it then to rely on borrowing (no matter how you justify it to yourself), you are simply living beyond your means. If you 'know how to manage your money and bills' so well then that simple fact would be plainly obvious to you.

Said the 18 year old... Age has really nothing to do with this. Unless you can give me a reasonable opinion, you're overreacting.

 

If you have sufficient money, there's no problem. Are you saying that using a credit card is basically another way of "borrowing" money? I really don't get it. You shouldn't go over your actual current balance, that's all. A credit card costs me about 3 EU/month which is next to nothing if you have a job.

 

I agree on the fact that banks will take advantage of the less fortunate or those who live from month to month (Meaning they will spend their money and have close to nothing left on their bank account at the end of the month). Sometimes this will cause their accounts to end up in the red. As you've said, this should be obvious if you know how to manage your money.

[Pooherino ツ]

Said the 18 year old... Age has really nothing to do with this. Unless you can give me a reasonable opinion, you're overreacting.

 

If you have sufficient money, there's no problem. Are you saying that using a credit card is basically another way of "borrowing" money? I really don't get it. You shouldn't go over your actual current balance, that's all. A credit card costs me about 3 EU/month which is next to nothing if you have a job.

 

I agree on the fact that banks will take advantage of the less fortunate or those who live from month to month (Meaning they will spend their money and have close to nothing left on their bank account at the end of the month). Sometimes this will cause their accounts to end up in the red. As you've said, this should be obvious if you know how to manage your money.

Well said.

[Nexxus]

That was your first mistake.

 

 

That was the second.

 

My advice is to destroy it as soon as possible. Credit cards exist to facilitate and entice us to live beyond our means and that is what you are doing (what you can only be doing) to own and use one. Trust me, it took me years and cost me literally everything to climb out of a very dark hole.

Sorry but because you were not responsible with your credit card and didn't realize how to properly utilize one hardly means he should "destroy it" I've had one about a year and a half, I use it almost exclusively to pay for things and have barely paid any intrest with it, the only time I had is when I put half of my DSLR on it about $700)

 

And then needed emergency dental work like...2 days later costing me another 400.

That's something else OP, a credit card can save your fucking ass like in my situation, I had a tooth ache..like keeping me awake at night holding my mouth level of pain, and it hit me right after getting my camera. If I just had a debit card I would of been forced to build up the money again making me live with a toothache for about a month before I could deal with it. I just had to live cheaply for a few cheques afterwards til I got it all sorted and paid for.

 

Simple rule with a credit card, have a ballpark idea of what you make in a month, do your best to keep yourself below said amount (aka dont go and buy a car cause visa will cover you 5 grand) at the end of the month pay it off, in the event you cant pay it all off at the months end give them every dime that you can afford to give them and still live.

[vanished]

Credit cards are fine, and much more convenient that debit in some cases since you can do whatever with a credit card but there are often limits on the number of debit transactions you can do per month before they start charging you per transaction.  Some retailers will also charge you at the time of purchase for using a debit card on small purchases.  Plus credit cards can be used in more places, online, etc.

 

However, for the love of god, do not use it as a loan!  Only spend in the month what you will be able to pay back when the bill comes, and always pay the full bill!

[Guest Philosophy]

That was your first mistake.

EDIT: M<y typing is bad this morning. 

Second Try: If he understands it, it can be a good thing. 

[Nuluvius]

Said the 18 year old... Age has really nothing to do with this. Unless you can give me a reasonable opinion, you're overreacting.

 

Age is relevant, it denotes your approximate level of life experience and progress (please note that I am leaving out maturity), i.e. how far you have gotten and how much you've seen to date  

 

For example then; do you have your own house, do you have children, a spouse, a stable job, assets, savings and so on.

 

If you have sufficient money, there's no problem. Are you saying that using a credit card is basically another way of "borrowing" money? I really don't get it. You shouldn't go over your actual current balance, that's all. A credit card costs me about 3 EU/month which is next to nothing if you have a job.

 

Then if it's not for borrowing money then why use it at all? For everything you spend through it you pay for the privilege in doing so. As for going over the balance, you should't I agree... until you do:

 

And then needed emergency dental work like...2 days later costing me another 400.

That's something else OP, a credit card can save your fucking ass like in my situation, I had a tooth ache..like keeping me awake at night holding my mouth level of pain, and it hit me right after getting my camera. If I just had a debit card I would of been forced to build up the money again making me live with a toothache for about a month before I could deal with it. I just had to live cheaply for a few cheques afterwards til I got it all sorted and paid for.

 

Yes it can 'save your ass' with the toothaches that keep you up all night and have you crawling around on the floor salivating into a bowl literally going insane. Or when you start the month and immediately your bank is overdrawn due to many of the same kind of 'unfortunate situations'...

 

It's very easy to get into this mindset:

 

Sorry but because you were not responsible with your credit card and didn't realize how to properly utilize one hardly means he should "destroy it" I've had one about a year and a half, I use it almost exclusively to pay for things and have barely paid any intrest with it, the only time I had is when I put half of my DSLR on it about $700)

 

And get angry at people who are outside of it and who all seem to sing this irritating chorus that doesn't quite get tuned out about shutting the door. Maybe because nothing has happened to you so far... Well it's easy for them because they have tons of money right? a huge great safety net all around them...

 

Simple rule with a credit card, have a ballpark idea of what you make in a month, do your best to keep yourself below said amount (aka dont go and buy a car cause visa will cover you 5 grand) at the end of the month pay it off, in the event you cant pay it all off at the months end give them every dime that you can afford to give them and still live.

 

There's the problem. It's not finding a solution once you are actually in debt, because there are not many once you are there. It's the mindset and thought process on the run up; the 'ballpark idea of what you make in a month' that will kill you. If you are truly careful and understand the complete details of your finances you will never need a credit card.

 

I agree on the fact that banks will take advantage of the less fortunate or those who live from month to month (Meaning they will spend their money and have close to nothing left on their bank account at the end of the month). Sometimes this will cause their accounts to end up in the red. As you've said, this should be obvious if you know how to manage your money.

 

You are correct and once that very thin line is crossed (often without realization) one can expect to receive absolutely no mercy. The whole system is designed and intended drag you down further and further.

 

Rip me all you like but ignore my warnings at your own peril, it's your life and finances not mine - I already went through it all and it was enough to last more than a life time. Many don't manage to get out the other side either.

[SpaceNugget]

That was your first mistake.

 

 

That was the second.

 

My advice is to destroy it as soon as possible. Credit cards exist to facilitate and entice us to live beyond our means and that is what you are doing (what you can only be doing) to own and use one. Trust me, it took me years and cost me literally everything to climb out of a very dark hole.

 

I am not doubting you, I totally agree that they are an unnecessary risk, but how do you purchase things online?

[Nuluvius]

I am not doubting you, I totally agree that they are an unnecessary risk, but how do you purchase things online?

 

Debit card works just fine 

[KirbyTech]

Credit cards should be treated like debit cards with one extra step that is you have to pay it off. Want to sink into debt? If so keep using your though process in the OP.