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
The credit card company loaned you 100 to buy the thing, and at the end of the month you just pay them back the 100. It would make no sense if you had to pay 100 for the thing and another 100 to the credit card company.
Though, what the credit company would *like* you to do, is to buy something you can barely afford and would like to spread your payments over a few months. So instead you buying a thing for 100 on credit and paying back the full 100 immediately, they’d like you to buy the thing for 100 on credit, and pay them only 10 the first month. Then 10 the next month, etc. Then you get used to still having 90 left over as the thing you bought was only costing 10 that month, and you buy 5 more things for 10, and end up paying back for all of them in the next months and months. On all of this they charge you interest particularly if you realize you can’t pay for all of it.
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