I have a small question about credit cards that I for some reason just dont get. I will give an example and maybe someone can clarify?
I want to buy something. I spend 100 dollars on it. I buy nothing else for the rest of the month.
Now, I keep hearing about “paying off” your credit card at the end of the month. So, I bought the thing for 100, it is added to my bill for the credit card. Am I paying 100 for the item AND 100 for my credit card since that’s how much I used on it that month? Or in total, getting the item and paying the card I’m spending 100? Sorry if this is confusing but it’s bugging me.
In: Economics
In your scenario you only pay $100 for that month.
The credit card company let you borrow $100 instantly when you purchased the product. So you just have to pay that back. Do that and you’re done.
But credit cards give you the option of paying less than that but at the expense of interest charged on the remaining balance. Which means if you don’t pay it all within a month (or technically, your statement period) you’ll end up paying more than $100 when its all said and done. That’s where people get in trouble.
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