2006-10-04 05:31:37 · 5 answers · asked by depressed 1 in Computers & Internet ➔ Other - Computers
A credit card is a financial tool. If used properly it provides great convenience. If used incorrectly it can lead to significant debt.
The correct way to use a credit card is to purchase the items you need and can afford. You buy them using the card so you do not need to carry cash. Every month you will receive a bill for the items you purchased and need to pay for.
You should always pay the entire amount each month. Otherwise, the credit card company will charge you interest on the amount you owe. The interest will continue to grow until you pay back the amount you owe the credit card company for the items you purchased. (If you pay the full amount due every month then there is never an interest fee for using the card.)
So, if you use a credit card responsibly by only purchasing what you can afford to pay each month then it is a great convenience. Otherwise, you can quickly get into debt.
Unfortunately, most people are irresponsible with credit cards and get into big trouble. Before getting one, look to see how you handle money and determine if it will be a benefit or problem for you.
2006-10-04 05:39:38 · answer #1 · answered by Plasmapuppy 7 · 1⤊ 0⤋
A credit card is a convenient way to buy things as long as you don't abuse it. Here's how it works: You apply for one through a bank or on-line or by sending back one of those forms you get in the mail. If you get a credit card, the card will have a dollar limit that you can charge against it. Whenever you want to use the card to pay for something, you simply hand it over to the cashier or swipe it through one of those machines. As long as you haven't charged up a bunch of stuff that takes you over your limit, the purchase is approved, you sign the receipt, and off you go.
Once a month, you get a bill. The bill tells you how much you charged, how much you can still charge on the card, your minimum payment, and when it's due. This is where credit card companies get you. If you pay the minimum payment, they charge interest on the rest. For example, let's say you spent $500.00 one month and the minimum payment was $20.00. You pay the $20.00, so your balance is $480.00, right? WRONG. They charge interest on the $480.00, and it's usually 1.5% interest PER MONTH, so your next bill comes back $487.20. That means you paid $20.00 toward your bill but they only knocked $12.80 off the bill. This is where credit card companies make almost all of their money, and this is where most people who have credit cards get into trouble -- they get a bunch of credit cards, charge them up to the limit, and as a result they owe thousands of dollars that they don't have and they're scraping just to make the minimum payments on all their cards every month.
So here are some tips for credit cards: (1) Don't get more than two, and make sure one of them is a Visa or MasterCard because they're accepted just about everywhere. (2) NEVER run your credit card(s) up to the limit unless you have an emergency and you have no other choice. (3) Make it a personal rule that you will pay off everything you charge on your card(s) IN FULL every month, so you should never use your credit card to buy something unless you're 100% sure that you'll be able to pay the bill in full when it comes.
2006-10-04 05:48:27 · answer #2 · answered by sarge927 7 · 1⤊ 0⤋
A credit card is the devil. It's a way for people that don't have any money to buy things they think they need. Then, interest is charged and people end up paying three times the amount for that item than if they would have just saved up the money in the first place. Most people rack up a debt that they will be paying for years and years...just because of a few items.
Responsible people will buy things in cases of emergency only, and then pay them off in full every month before interest rates are charged. This is harder to keep up than most people realize. Chances are, if you don't have money now, you won't have money later to pay the bill.
2006-10-04 05:36:03 · answer #3 · answered by green is clean 4 · 1⤊ 0⤋
A loan with a very high interest rate.
You borrow $$ to buy things and the card issuer ( the company that pays for the stuff ) sends you a bill for the $$ plus a lot of extra $$ for the handling expenses.
2006-10-04 05:42:01 · answer #4 · answered by kate 7 · 1⤊ 0⤋
a credit card is a card provided by banks which allow you to make payments using this card instead of hard cash. you just have to provide the card of you name and signature on it instead of cash on some purchase and you can buy stuffs...........and on this you dont have to pay the bank before hand......the bank will charge you for this later with intrest on it acordingly. these credit cards have certain limit after which you cannot buy stuff for this you have to have a regular payment scheme with the bank
2006-10-04 05:37:24 · answer #5 · answered by Sielent Worrier 3 · 1⤊ 0⤋