Can someone explain the credit cards?

Question

I just got a credit card over a month ago. According to my dad, he said my bank has a low interest rate on credit cards, so I got a card through them (private bank through Abbott). When I got the bill, I was only charged with what I spent, nothing more. So where does this interest rate charge come in? Is it only if you pay the minimum charge?

Another thing, what determines your credit score? Is it how much you spend? Or how well you pay off your bill? I want a good score, so I've been using my card. I have no problem paying it off. I just want to know how I can get a good score.

Answer 1

Firstly, you only get charged interest when you don't pay the full amount up when the bill is due. There is usually a minimum payment due, but you don't have to pay more that that minimum but it will cost you interest.

Your credit score is complicated, it's bases on how long you have credit, how much debt you have, what assets you have, income you have, etc, etc, etc. Do a google search and there's a lot of articles about credit scores and what goes into them.

Answer 2

If you only pay the minimum payment, you will be charged interest on your next statement.  Interest is calculated on the average daily balance, not the unpaid balance.  If you pay the whole bill before the due date, you won't be charged any interest.  The time between your purchases and the due date is an interest free grace period.

Your credit score is based on how well you pay your bills.  This site has lots of good information about your score:  http://www.myfico.com/CreditEducation/Wh...

The best way to handle your credit card is to use it and pay it in full every month.  You will build a good payment history, save on interest and stay out of debt.

Answer 3

The interest charge comes in by not paying your bill in full during the bank's "grace period."

Your credit score is determined by several factors: bill payment history, length of credit history, how much credit you have, how much debt you have, etc.

The chart referenced below will explain it in much greater detail.