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
you seem to be be mashing together the idea of a credit card and a Debit card.
a Credit card works similarly to a small loan, it allows you spend as much as you need, but when the time comes you are expected ot pay the bill you are sent. you dont HAVE to pay it all at once(generally) but you really should(and keep your spend below your means) since unpaid credit card debt generates interest.
a Debit card on the other hand works solely with the funds that currently exist in your bank account, ie if you got 2000$ in your account, that your absolute spending limit thru your debit card, as you cannot spend what you do not have.Bank generally do their money in these thru transaction fees for making the card available(these fees are normally charged on the seller hence some business ask for a minimal spending before allowing you to pay by card.)
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