Talk to me like I'm a 5 year old. I'll keep the values to small amounts
Let's say that your credit limit is $500.
You have $300 on your checking account, which can be linked to your credit payments. 2 scenarios:
Full payment.
Let's say you spent $400 in a month. They will then deduct $400 at the end of the month to pay off your credit, but since you overdrafted by $100, you will be charged $22 for it. So you end up paying $400+22.
Minimum Payment:
Spent $400, so your checking gets debited $10 as minimum payment, and the company sends you a bill for $390, which you pay off before the deadline. Total cost: $400.
So am I right to say that it's better to use the minimum payment scheme since I don't have to worry about overdraft, as long as I make my monthly payments on time? I'm just trying to build credit, I don't have plans of incurring debt. Just want to clear things up.
2006-09-20
12:30:26
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6 answers
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asked by
fundoctor
2
in
Credit