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
For all intents and purposes in this scenario: Think of it like a debit card with $2000 (or whatever the limit is) loaded onto it. You spend $100 to buy something. You now have $1900 left to use. If you pay off (and you should) the balance of $100 in full by the end of the month (different companies have different days) then you won’t owe anything else and that’s that. IF you didn’t pay anything, then interest starts to accrue since you’re borrowing that $100 to buy whatever, based on whatver the APR (annual percentage rate) is.
In reality instead of a debit card that takes the money you have, you’re asking the credit card company to loan you $100 to buy this thing.
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