How does a credit card work and is it a good idea to get one?

Answer 1

First, credit card companies check your credit score to evaluate how much your credit line will be (how much you can spend). Then, if you qualify for the card you are trying to get, you will receive the card in the mail. You will have to call and activate the card. You then can make purchases using the card. You should only use the card if you have the money to pay it off. Each month you will receive a statement. You can pay how much you would like but the catch is what ever you don't pay, you'll have to pay back with a high interest rate. It is smart to have a credit card to build your credit score. One day, if you are buying a house or something, you will have built sufficient credit.

Answer 2

Well, it depends on how badly you need the money. Credit cards are a way of buying something now, and paying for it later (a method of deferred payment). The cost of borrowing from a credit card 9interest rates) are usually high. I don't suggest getting a credit card for fun shopping because its a loan. In some cases if you are not able to make payments you could ruin your credit rating and then you will have a hard time buying bigger items like cars, or houses. On the other hand, if you are responsible and have a good job then i suggest getting a card that does not have a high interest rate. I hope this helps.

Answer 3

Most credit cards are unsecured credit cards, which means you don't have to put up any collateral like a house or a car to get one. When you apply, they look at your credit history and your income and they decide whether they're going to give you a card. If they do, they also decide what credit limit you will have.

Most people who get their first credit card have a credit limit of $200.00 to $500.00. When you buy something using your credit card, you get a bill for it at some point during the month. They will tell you that your minimum payment (usually $15.00 or $20.00) is due by a certain date. As long as you make the minimum payment, you're cool. You can pay the whole bill if you want, but you have to make sure your payment gets in on time.

You can continue to put things on your credit card as long as you don't exceed your limit, but if you make the minimum payment every month, two things happen: (1) Your available credit is very low, which is bad if you have an emergency, (2) You pay an outrageous amount of interest, usually 18% to 20% per year, and that adds up fast. That's why they say you're always better off paying off your entire credit card bill every month.

Credit cards are very good for emergencies when you may not have cash handy (for example, you're taking a major road trip and your car breaks down 500 miles from home), and having a credit card helps you build a good credit history so you can buy a house or a car later on -- but only if you use your credit cards wisely. If you run them up to the limit regularly, or if you're late on payments, that'll hurt your credit history.

Answer 4

You pay using the card. You are billed each month. You pay-off either the minimum amount required or the total. You can set it up to pay automatically by t direct debit from your bank account. Some credit cards give you 1 % cash back or 0 % interest on what you spend -for up to 12 months in some cases. Then you have to pay back & if you don't its high interest. BUT you can do a balance transer to another credit card that offers 0 % interst for balance transfers - but these are tending to charge 1-2 % for the privilige. SO its a great idea as long as you pay off your bills each month. Don't spend more than you would anyway. It will help you build up a credit history. This helps you get loans when you really need them. If you cannot control your spending then don't get one.

Answer 5

Credit cards are a must in todays society. You will need to get at least one to build your credit history. But the smartest thing you can do after you get it is to make one or two purchases, pay them off immediately the first month and then not use the card again. Pay cash for what you want. Too many young people get so strung out on cards treating them like free money and it ruins their credit. It keeps them from qualifying for a home purchase. Keep your credit history in good shape so when you get married and want to get the things that really matter for the future, you can do it. If you can'tpay for it in 30 days, don't charge it!!!! Save up the money and pay for it with cash.

So credit cards are good if you are disciplined and want to build a credit history. They are bad if you can't control your spending habits.

Answer 6

It's a great idea to get one if you know you will use it for necessities only. If you think of it as your banking card and spend on utilities, gas, food, etc then go for it. It will help you build a solid credit history for when you need a loan or a mortgage. The benefit of cards these days is that you can get actually make money by using your card (1-5% cash back) if you pay your bill every month and avoid paying interest.

best of luck!

Answer 7

They work by lending you money, then charging you and arm and a leg interest for the 'favour'

Running into debt is a really, really bad idea. If you can't afford it, don't buy it, wait and save up. Anyone who says otherwise is, at best, a fool.

Think of it this way, card repayments are anywhere between 7% and a whopping 30% in the high street, 16.5% being the typical average - you try an find a single bank or institute in this country offering even 3 or 4% interest on savings without you agreeing to put large sums in long term investment.

Really, avoid them like the plaque!

Answer 8

When you use a credit card, the credit company basically gives you a loan, which you pay off over time. When you purchase items, no money comes out of your bank account until you pay off the card.

Using a credit card online is much safer than a debit card online, as the credit card company can help get your money back if your buy from a fake seller.

You can find different companies here:

http://kfgmaster.ecreditdirectory.com/

Answer 9

If your financially stable and know how to handle ur money, get one. If u tend to overspend and spend all the cash you have, then no. It is basically a "credit" system where the company pays for your purchase, and you pay the company back at the end of the month. However, you pay one day late, and a hefty interest will be incurred. It is always good to pay 3 days early just in case the payment takes a while to get through. Always be careful of credit cards, and ALWAYS pay ur bills on time

Answer 10

Credit card is a great idea if you use it right.
1) it will help you get credit and get good loans for a car and a home
2) if used poorly it could ruin your credit preventing to get certian things, so use it carefully. Credit card is a loan but you get a limit never go over 50% of that limit it spells trouble.