I am 18 and just got a credit card. I was just wondering how it works.?

Question

This is just an example i guess? If I was to buy something that cost $150...should I pay that $150 all at once, or should I make monthly payments....I've heard different things...I've heard that I should make monthly payments to show them that I actually can pay payments? and I've heard that I should pay the $150 all at once? If any one can help thanks

Answer 1

Well, you should use it responsibly.

Answer 2

You can pay the whole thing at once, but what's better for your credit is if you make payments, and also make sure you keep the balance of your credit under 30%, for example if your credit card limit is $100 your balance should not be higher than $30 because it would go against your credit.. and also pay that $150 balance in few different payments and it's doesnt have to be $150, you can put like a $10 balance on your card and have it there every month, so it can help you improve your credit score... for example buy something for $30 and when you get the bill pay $20, and than buy something again for $50 and pay $50 so this way you have a balance of $10 left over every month to improve your score.. if u need more info, just ask

Answer 3

I work for a major credit card company. Here is a piece of advice for you.
First - DO NOT GO NUTS with it!! Its tempting to buy things with a credit card that you dont have cash for - but remember that you will be paying interest on the purchase if you dont pay it all off each month.
Second - Do use it - with in reason of course - and make monthly payments - but more than the minimum. If you only pay the minimum, it will take ALONG time to pay if off & in the mean time most of the payment is interest with very little going towards your principal. If your minimum payment is 25.00 - pay 50.00, etc... I always say double what ever the minimum payment is.
By you using your card & making consistent ON TIME payments (never ever be late!!) you are establishing a good credit history.
Third - And most important - use it wisely. Remember that your credit history stays with you & if you ruin your credit - it takes A VERY long time to repair it.

Hope that helped & good luck to you.

Answer 4

It's always better to pay off the balance completely as soon as possible to prevent fees and interest from adding to the amount you owe. The reason some suggest keeping a balance on your card is to help build your credit by making monthly payments. I disagree with that- you show more responsibility by paying off your card and at 18 yrs old, you have plenty of time to continue building credit. Also, you can check out this site for more info.

Answer 5

Well, in my experience it's good to pay it off all at once unless your credit card has some interest free first year or something as a promotion. You have to remember that any balance that you don't pay when due will be charged interest, which will make your balance bigger next time. Credit cards are great in that you don't have to pay things immediately (ie buy something now and don't pay until the statement/bill comes at the end of the month) but they can easily lead to credit problems. A big mistake people make is thinking of credit limits (the amount of money you can charge on the card) as "free money" that they don't have to pay off for a long time. They get in a lot of debt by racking up a lot of interest on top of the initial amount of what they bought.

Answer 6

The worst thing you can do with your credit card is not making full payment and going into minimum monthly payments. If you start that once you will be paying for the rest of your life till you get bankrupted!!!
Always spend on your credit card as much you can pay right away.

Answer 7

If you can afford to make the full payment make the full payment. If you are going to make payments on it pay as much as you can. The thing about credit cards is some tend to use it to buy stuff they don't need or other wise would not buy unless they have a credit card. You have to be careful on what you buy because it comes with interest and after a while if you're not careful you end up in dept and ruin your credit. A credit card can help you establish credit but it can also ruin it if you are not careful. Trust me I had to learn the hard way. Just be careful and use it wisely. Good luck.

Answer 8

I was brought up to make the full payment each month to avoid paying any interest, but I run the card up too high and I can't afford that. The more money you pay in interest, the richer you are making the credit card companies. Do what is best for you, making the minimum payment each month will never pay off the balance, by paying off the full balance each month your credit report will show "paid as agreed".

Answer 9

The best thing is to pay the card off for that small of a balance. The card companies want you to rack up small balances. A credit card's purpose for young people is to make large purchases tha they will not be able to save up for because you don't make enough money. For example, when you first move out most teens need a TV or a couch for their place but will not be able to afford one payment. With a credit card you can break a large expense into smaller payments with interest. But save it for those purchases only and don't waste money buying little small things unless you can pay it off immediately.

Answer 10

Pay the $150 all at once. If you don't, you'll be charged interest on the unpaid balance and the $150 will end up costing you $200, by the time you pay it off in full, maybe more. ALWAYS pay your credit card balance in full every month, WITHOUT EXCEPTION.

Answer 11

If you pay $100 of the $150, you would have a finance charge of the remaining $50 times some interest rate the next statement, versus just paying it all off and owing nothing.