What is the deal with Credit Cards??

if you do not pay off the money owed (for purchases made), it becomes a LOAN and you'd have to pay interest.

Otherwise it is just paying the money I spent? In other words, lets say, I purchased a computer this month; with a credit card. Then after I recieve the bill in the mail - I pay them.

Am I just paying for the computer?

I think you can pay bills with checks...is there any other methods of paying off the bills.


By the way I would like to thank you all for your help.

I recently straightened out a credit card mess for my schizophrenic (and slightly retarded) stepson.

He had three credit cards, all maxed. Limits $200, $500 and $1000.

His only income at the time (we controlled his disability check) was his salary as kitchen help in the local nursing home: $500 a month.

Of his $1700 indebtedness, only about $900 was from purchases. The rest was late fees and penalities for bouncing checks--and interest on all of the above.

Personally, I haven't paid a penny of interest on my Mastercard since 1975--and that was because I couldn't pay off emergency plane fare all in one month.

Like fire, a good servant, a bad master.

There are lots of ways to pay bills these days.

Some people set up with their banks to automatically send monthly or bi-weekly checks to certain places. When combined with automatic payroll deposit, this is a good system, but it can take up to 5 days for the money to leave your account and actually get credited to your loan or service. Not a good turnaround time at all. You are out the money for the duration.

You can be set up to auto transfer your money from a savings or a checking account (at the same institution where you have your loan / credit card) to make a payment for a loan or a credit card.

Sometimes you can phone in and pay check / credit / debit card by phone.

Sometimes there is an audio line where you can phone in the transfer from savings or checking to you credit card / loan. And you don't have to commit to the auto transfer on a particular date. I like this system the best.

Sometimes, there's a Web site where you can go online and transfer the money from savings or checking to the loan / credit card.

You can always write a check / lick a stamp.

If you bank with a credit union, many are members of shared branches where you can do business at up to 1800 locations world wide, different credit unions, with different names.

here is an interesting little tidbit from "business week" magazine : "the deeper the hole, the better the business" - a small cadre of public collection agencies that specialize in the purchase of unpaid credit-card obligations and other bills are some of the best performing companies. banks and other lenders sell bad debts for between 3 - 5 cents on the dollar ! one company, portfolio recovery associates, went public last fall at $13 a share, it hit $35 by year-end ! nice work if you can get it ! hbg

Welcome Kyle.esq,
Re: your computer example:
If you buy a computer in, e.g., January, you will receive a credit card statement at the end of the month that includes the computer purchase. If you write your credit card company a check that covers the entire cost of the computer and any other charges on your card shown on January's statement, you will not pay any interest. If you only write a check for half of the computer's cost, the credit card statement you receive at the end of February will include interest charged on the remaining (unpaid) balance of the computer's cost. The interest assessed at the end of February will only apply to the unpaid balance left on the card at the end of January--if you pay off the total card balance every month you will never have to pay interest.
The credit statement will give you a minimum payment amount; if you fail to pay at least the minimum you will get hit with additional fees. As jespah's example shows, only paying the minimum is not wise financial planning.

Never never sign up for a credit card that offers you a free tee shirt for applying. It's a sucker bet. They target college students.

Keep your limit low; ask for something low, say $500, in case you do run into trouble. That way you can pay it off and it isn't thousands of dollars. It will build your credit and give you some experience with financing.

Credit cards sure aren't for everybody! I've decided that I'm better off without them. My debit card with the visa logo is good enough.

I agree that they are good for getting your foot in the door to build credit, but if you loose your job or fall behind on your payments, there goes your credit! It takes years to build it up and only one mistake or incident to mess it up.

I'd rather just save for everything I need and buy it when I can afford it. But, that's just me. For most people credit cards are a good deal.

Stay away
I would disagree with most people on this subject. I would say stay away from credit cards!!! I'm twenty-five years old and if I could go back to when I first got out of high school I would run from all credit card companies. Besides the fact that most of these companies are crooks and break the law on a daily basis, most people don't have the self-control they think they have!!! I know lots of people have them anyway but I prefer the cash method. Besides if you can't pay for it up front " Do you really need it?"

ps. They are other ways of building your credit. You don't have to have a credit card to build credit!

mrpeterson--

Welcome to A2K.

How do you suggest building a credit record without using credit cards?

Personal loan (may need cosigner), or some small secured personal loans.

1st time buyer auto loan, or conventional loan with cosigner.

Student loans.