credit card help?

Question

Okay I have a credit card that I have had a few months and I have been paying off what I spend each month up until now.

For the next few months, I really need to use my credit. It is a $1000 limit and it says that my minimum payment only has to be $15 ( currently I only have about $450 available credit)

If I pay the $15 does my limit go back up to $1,000? And then how do I actually pay off everything I owe then I just make a bigger payment then they are asking? Can someone just explain this to me and will it make my credit look really bad if I only make the minimum payment for a few months then pay everything back?

Answer 1

You can borrow against your credit card, but the interest rates tend to be higher than other types of consumer credit. But you can certainly do it, and millions of Americans do.

Let's say that last month you paid your bill in full. So you receive a statement for this month. It shows you owe $400. If your limit is 1000, you have 600 more you can spend. If you only pay 15, and then spend 200 more, you will get a bill for 400+200-15 plus interest. If interest is 10, then the new total is 595. If you pay 15, and spend 100, then next month the bill is 595-15+100 plus interest. If the interest is 12, then the new total is 692.

In other words, every month they take last months balance, subtract payments that they receive, add new charges, add interest, and print a new balance.

The $1000 limit refers to the total balance outstanding, including interest, and is not a limit on monthly spending. After you owe them $1000, they don't want you to spend any more unless you pay it down or get their permission to spend more.

Answer 2

If you pay the minimum payment on a credit card, it will take you 10 years to pay it off, with a balance of $1000.

If you HAVE to make the minimum payment only, that is fine, that is all you are required to pay, but if you want to get it paid off faster, send more than the minimum. Actually with the FICO credit score, one thing they look at is if you paid the minimum on your payment or if you paid OVER the minimum. If you paid over the minimum it looks better and increases your credit score a BIT, not much, but a bit. Even on the months I am dead broke and can only make the minimum payments, I send $10 extra along with the minimum.

I dont think I am understanding your question "If I pay the $15 does my limit go back up to $1000?" Your credit limit is still $1000, but you have $550 charged on the card (if you have $450 available credit)... That means if you spend $450 dollars more, you will hit your limit on the card and won't be able to use it if you don't pay the balance down. To increase your over-all credit score, pay it down to at least half of the limit, so pay it down to $500 or lower... Hope I didnt confuse you that bad and that this helped some.

Answer 3

It won't hurt your credit much but it's a great way to stay poor for a long time. If you can "afford" to pay the minimum on your credit card balance, then you can "afford" to save up your money and pay cash for whatever it is you want to purchase. Why pay interest to a credit card company when you can save?

Answer 4

Search - Clark Howard, the millionaire tightwad.