How do I use a credit card?
Ok, I'm sorry this is such a stupid question, but I am a stupid person.
I don't know how the hell to use my credit card as I just realized from making another question a few minutes ago.
I have a visa credit card and the credit limit is 500 dollars
so like...wtf does this mean? lol.
Before I always thought it meant they gave you 500 dollars to start off with and once you spend that $500, you need to make sure that you keep above $500 dollars in that account otherwise they will charge you interest. But that sounds more like an overdraft (which I also don't know much about, but enough I guess)
Update:Credit card limit: (Adjust limit) $500.00
Current balance: CR $91.11
Available credit: $591.11
Interest rate: 19.45% pa1
thats what it says - does that mean I am ok? like I have been making my payments"? Oh man I weep at my stupidity.
Comments
A credit card is basically a loan.
You have been told that, during any one month, you can borrow up to $500 to purchase things with.
So, you can go into a store, say, and purchase a radio for $250, and pay for it with the credit card.
Once you've done so, you owe the credit card company $250. If you pay them the $250 when you receive your monthly bill, you don't owe any interest (which is the best thing to do).
If you want to pay off the $250 in pieces, say $50 each month, you can do it that way, but you'll be paying interest each month. You have to at least pay the "Minimum Payment" stated on the monthly bill. But, it's best to try to pay the full amount, because if you only pay the "Minimum Payment" you'll end up paying (because of the interest) a lot more than $250.
A debit card is different. For a debit card, you aren't borrowing any money, but are using money that already is yours, that you deposited with the bank.
UPDATE
Here's how to look at your monthly statement. You are permitted to spend up to $500. You overpaid by $91.11. That means that you can spend up to $591.11, which isn't bad, but isn't really the way the credit card was meant to work. Any month that you don't pay your charges in full, you'll be charged 19.45% interest (which is pretty high).
Unless there's something unusual about your credit card, next month just wait until you get the monthly bill, then pay the total amount (not just the minimum payment) that you owe.
As for stupidity--nope, you aren't stupid. Stupid people are those who run up large debts and then struggle with the monthly payments. The way you've been apparently handling your credit card is like you would do for a debit card--restoring each month the amount of money into your account that you paid out.
There is $500 that you could spend whatever you do spend you have to pay back after 30 days they add interest on top of your debt at about 20% per year ---- think very carefully before spending what is essentially somebody else's money.