how do credit card payments work?
Ive been thinking of ways to build my credit recently because its actually reallu bad. Before going and applying for a credit card I was just wondering.. how do the payments work. I feel like the whole concept of a credit card is confusing. Can someone explain it better to me?
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1. Applying for a credit card does not build credit. Applying for a credit card does the opposite. It makes your credit even worse than it already is.
2. If your credit is really bad when you apply, then you usually won't get the card, so there aren't any payments to make.
3. If you want to build credit, then do not apply now. Wait until your credit has gotten better due to time alone, and don't apply until then.
A credit card is basically a pre-approved loan up to a dollar amount with a minimum monthly payment due and a fixed interest rate. If you are approved you will get the credit card, let's say it has a limit of 500.00, that is the most you can charge ( borrow) at any point. You charge 250.00 on June 1 and your billing cycle closes June 6. You will get a bill around the 10th stating the 250.00 charge and it will be due July 5, It will list a minimum payment of $25.00. If you pay just the 25.00 the $225.00 will carry to the next month and you will incur a finance charge, if you have poor credit expect it to be25% APR, this is 2% a month so this would be 4.50, if you do get a card pay it in full each month.
It really is very simple. Credit cards have a billing period. Transactions before the closing date show up on your monthly statement. Transactions after the closing date show up on the next statement and are due by that statement due date.
The monthly statement details all your transactions within the billing period, minimum payment due, and due date. As long as you make at least the minimum payment by the due date, the card will report on time payment to the credit bureaus. However, if you pay less than the full statement balance, you will be charged interest.
If you use the card for regular purchases and pay the statement balance in full every month, you build credit and avoid interest. There is not requirement to charge a certain amount and carrying balances does nothing to improve your credit/score.
Credit cards are open-ended accounts. YOu have a limit. The amount of that limit that is available for use goes up and down as you charge stuff and make payments.
These sites have good basic credit card info:
http://www.federalreserve.gov/creditcard/default.h...
http://www.consumer.ftc.gov/articles/0205-using-cr...
Credit card means when used the creditcard purchase something or loan throught company.You pay the company back loan first fill the application details.Next payment details fill up amount large , medimum, small, monthly to monthly which is best option you click it .
The cc sends you a bill every month. You review it and pay it.