how do credit card fees/percentages work


Does any of that jizz matter if I always pay it off on time?

In: 8

Technically no. If you pay your balance in full monthly you are not charged interest. But as soon as you start carrying a balance the interest rate matters.

It depends… But for most credit cards, you only owe interest if you carry a balance. So you spend 100 bucks in a month, you get the bill that says your balance is 100, and your minimum payment is maybe 15 or 20. If you pay 100 (in time) then there are no fees or interest. If you pay say 50, then you will pay interest (likely more than 20 percent a year) on the 50 dollar balance. If you pay late, you will also pay fees on top of that. You have to pay the interest before the principal. So even if you spend 0, and pay 50 next month, you will still have a balance.

People get fucked with credit cards. By far the best thing is to fully pay off your balance. Many can’t. And also many snowball with the idea “well, I already have a balance of 500… What’s another 200?”. They don’t make the interest super easy to see. Your next bill will just say your balance is this and your minimum is this. You have to dig a bit to see, holy shit there is a ton of interest in each bill. Credit cards wreck many people.

If you pay the statement balance or the total balance by the due date will pay no finance charge (those percentages).
This is on all credit cards. The other answers were not quite clear.

If you charge 75 to your card at 12% and only pay 25 (the minimum) by the due date. You will be charged 1% on the remaining balance, $.50. Now many cards have a min finance charge of $1. So that would be added to your bill.

But as long as you pay at least the statement balance, you will pay nothing more.

Check the cards terms, many have a period of interest free when paid off in full, usually between the first day of the statement period and its due date (56 days) however, not all have this.

Also, not all transactions are equal.

Purchases at Amazon, your local supermarket etc will be ok. But gambling, travel currency and cash withdrawals are classed as ‘cash’ purchases and will be charged interest from day one. There is also a fee for cash…

On the matter of fees, most are to discourage you from missing a payment or using the card for cash purposes. However, annual fees that you pay for the privilege of having a particular card may also apply, no matter how much or little you use the card.

TL;Dr – read your cards terms.

There are two different % fees that credit cards collect, so even if you pay it off on time the credit card company still gets paid.

Typically, credit cards will collect 3-5% of every transaction cost from the vendor that accepts the credit card as payment (usually its 3% if chip is used; 5% if number entered manually).

The really high consumer percent/fee will only get charged if you have a remaining balance and don’t pay it off.

The vendor charge varies depending on how it was used because the creditors claim different fraud %’s based on different methods.