How do credit cards work?

Question

I'm new to this. Do I only have to pay interest for the items I buy? Do I make payments monthly? Which credit card is great for establishing credit? I am a college student. Thanks!

Answer 1

You do not only have the pay interest on items you buy... you have to also pay for the items you buy.  If you charge $100 in one month.. the minimum payment will probably be about $15.  Then the next month you charge $100 + interest on the $85 so your next bill is like $201.15 & you owe more money.  Do not just make the minimum payment.. as you can see you'll never get the balance paid that way. Be very careful with a credit card.  YOu can get into SO much trouble.  Yes, usually they bill you every month.  Any visa, MC or Discover is fine.

Answer 2

well your on the right track.  i would read all you can and make sure you understand all conditions before you agree to get a card.

considering that i'm board i'll give you my blurb about credit cards if you care to read it..

credit cards are a great way to achieve higher credit scores IF YOU USE THEM RESPONSIBLY.  if you don't though, you can easily fall into debt.  so the biggest advice i can give you is not to buy what you can't afford unless it's an ABSOLUTE emergency.

there are many different types of credit cards out there.  all of them with different apr's (anual percentage rates) which will tell you the amount of interest you are paying for the money you borrow.  the lower the number the better.  as your credit score rises, you will get the benefit of cards with lower aprs and better benefits.  some cards have what is called an annual fee.  they usually start at around 20 dollars or so and go up from there depending on what type of card you have.  this means exactly what it sounds like.  every year they will add that annual fee on your statement that you will have to pay off.  sometimes in order to make cards more appealing, as a  marketing too,l a card will lower it's apr and make an annual fee that is pretty expensive, and vice versa.  that's why it's always important that you read everything clearly.

another example of things to check for are cards that claim NO APR UNTIL such and such a date.  this basically means that what ever balance you put on your card, you will have no interest on it for a limited period of time.  however, it seems to give people the false notion that they have a temporary free bank full of money at their disposal and go on a big shopping spree.  they wind up wracking up serious debt in short amount of time only to get there first statement at the end of the month and see they have to pay the entire balance in full without the option of making minimum payments.  that's a big one.  so again make sure you check through your cards policies before accepting or using it.

in short follow these simple guidelines:

1.) use your card, but don't spend more than what you can easily pay off in a month or two.

2.) never go above your limit.  your card will tell you how much credit you have, usually 500 dollars or so is the norm.  if you go over 500, that's bad.  you get a penalty charge, and it's not good on your credit report.

3.) always pay at the very least the minimum payment, and pay your bill on time before the due date.

if you follow those rules you will:

1.) improve your credit by showing you are a responsible customer.  (however even if you are responsible and pay on time, if you get 3 cards and they are all maxed out and ur just making minimum payments every month that doesn't look so good to creditors either, so keep your cards payed off.)

2.) your lender will give your more credit at your disposal.  every few months you might see your credit line increases by 250 or 500 dollars.  so that means you can borrow more money from them if you need.

anyway, i'm tired of writing now.  if you want to know more ask your parents.  hopefully that was somewhat informative and not boring.  :)

Answer 3

the most important is the interest rate and monthly fee of the credit card. ideally, you should get a credit card with an interest rate of about 7 or 8 percent and no monthly fee.

for full reviews and comparison features which make it easier to know which one is the best card for you, check out http://www.cardlister.com

Answer 4

They all are great to establishing credit. The posts before did a great job addressing the uses of the card. I just wanted to mention that you can research available student credit cards by going here: http://www.apeepa.com/Student_Credit_Car...

Answer 5

If you're new and want to start building credit, read this helpful article:

http://www.buildcreditblog.com/credit-ca...

Answer 6

GET THE DISCOVER STUDENT CREDIT CARD.  If you are in college this is by far the best card to get.  You only pay interest if you don't pay your bills on time, so long as you pay your bill on time you aren't charged any interest.  The Discover Student credit card great for establishing credit, they start you off with a low apr so you have some time to figure everything out.  If you use applyfastbankcards.com to apply for this card or any other you will get paid.  I got paid $40 when I applied for my Discover Student Card.  Good luck:)

Answer 7

Its just like a loan.  You pay interest and principal.  You make monthly payments.  Any VISA, Mastercard, Discover or American Express will establish credit at the same rate.

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