Can some one explain credit cards to me?

Question

I basicly want to know how one works, what APR is, Balence tranfers etc...cos im thinking of getting one but dont want to untill i know full facts

Answer 1

Credit cards allow you to purchase items and pay your bill in installments, with interest. So if you spend $1000, you can pay only $20 a month until its paid up...but of your $20, perhaps only $7 will go towards your bill. The rest is interest.

APR is your interest rate. 8% is GREAT, 30% is HORRIBLE. Usually your credit score determines your rate, but the credit company will try and get as high a rate as they can.

You can pay off your card whenever you want, and won't pay interest on the remaining amount. Some people are diciplined enough to pay back what they spent every month, so they never pay interest. Most people have that intention, but end up getting further and further in debt.

Sometimes you'll be offered a card that has 0% interest for a few months. That means every cent you pay towards your card goes towards your bill instead of interest. You can transfer your balance to one of these cards, but beware because eventually a high interest rate will begin.

Here's a few rules for you:

- Don't get a card with an annual fee
- Cards with perks (like airline miles for every $ spent) usually have a higher rate.
- Don't go over your limit...you'll be charged penalties and your credit score will suffer
- Don't pay late, or you'll be charged penalties and your credit will suffer
- Its best to sign up for a card to obtain credit, perhaps use it a couple times and pay it off...then leave it alone. You'll need credit for car loans, mortgages, etc...a card is a good way to get started.

Answer 2

Hello,

(ANS) Credit cards are a VERY VERY clever financial tool. A credit card is a method of borrowing money (not your own money but the banks money, meaning money you havent yet earned).

With a credit card the bank or the lender gives you a credit limit based on various factors such as your employment or salary (income), your assetts such as property or expensive cars,etc and also where you live.

Generally people seem to spend on their credit cards and then pay the outstanding amount back each month when the CC statement arrives.

CC do have their uses if you are financially aware & responsible with your spending habits. Meaning CC can give you as much as 28 days free credit before you have to pay for any item.

CC's do come with card insurance which can be extremely useful if a company you made a purchase from goes bust or where some kind of fraud is found.

**However, the down side (dark side) of credit cards is that using CC's doesnt feel at all like spending real money and its for this reason I suspect that so many people end up in debt on CC's more than any other financial method.

**The problem with CC's now a days is the increased risks of ID fraud or CC theft or CC cloning, i.e. fraud with a CC.

**Many CC do have outragous annual % rates of interest, this is done deliberately so as to discourage card holders from abusing their cards. Meaning that if you dont pay off your monthly balances ASAP you get hit for massive charges.

**Balance Transfers, most CC companies offer you either zero fee's when trasfering funds into or onto your CC. But may charge you a % fee for transfering funds away from your CC to some other account.

**A sure sign of bad debit on a CC is when the card holder can only afford to make the minimum monthly pay back fee's such as £20 per month on a £30,000K debit ( a sure sign the user is struggling financially).

**If you want to avoid getting into debit in the first place DONT take on a credit card. Personally I learnt my lesson once & only once by having a CC, Never ever again.

**Remember with a CC its NOT your money your borrowing its the banks or the CC company. Its only your money once you have paid it off.

PS:- debit cards are alot better as you cannot borrow money on them in the first place.

Hope that helps?
Best Regards IR

Answer 3

They are useless items of plastic that will become a huge bind in your life.

The bank will throw lots of money at you because they will trap you into paying large amounts of interest for the rest of your life.

Once you have £1,000 on a credit card it is very difficult to get the balance back down, due to the interest added each month.

Forget APR and interest rates, they are all bad. If you don't have the money to buy something, don't buy it.

If you need to raise some cash, do a car boot sale or sell on Ebay.

Answer 4

Look for the yearly fee if any. Look for the number of grace days you have to pay the bill. If you pay the balance in full and have a zero balance then the next month make purchases, be sure they won't charge you interest.

Always pay the balance in full each month. That way you won't be paying any interest charges which are quite high in most cases. good luck

Answer 5

The best advice is, Dont get one, save up and pay cash for everything you need.

Answer 6

debt