Can someone explain how credit cards work simply ?

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  1. The bank pays for the stuff up front for you. Then you pay them back over time, plus a little bit more.

  2. you buy stuff that you have to repay later with an added charge, it is better to just wait and buy it with cash

  3. You buy something on a card, the purchase price is a loan from the credit card company. If you don’t pay it back by the due date, you get charged interest on that loan.

  4. The shop pays the credit card company/bank a transaction fee through the card machine company and their fees, which is higher than a debit card fee.

  5. It’s a loan with a grace period. Each month they send you a statement for all charges that month and if you pay it off by the due date you pay no interest. You can choose to carry a balance by only paying some of it (there’s a minimum monthly payment though) and then it works like a normal loan and accrues interest until fully paid off.

  6. You use a card. Let’s say you spend 100 bucks on something. The card company is basically giving you a “loan” for that 100.

    For loaning you that money, you will pay an interest of let’s say 10 percent which means if you pay the minimum of for example 10 dollars per month, for each month you do not pay off the balance, they will charge you an additional 10 percent.

    Basically that item you paid 100 on the card for, your actually paying more for it over time.

    Best practice is to try and pay off any card purchases, asap to reduce the cost.

  7. Company buys thing for you. You pay company back plus interest. The longer it takes you to pay the more you end up paying

  8. You don’t have cash on hand or enough money on your debit card so you get a credit card. Usually you’ll get a max limit of what you can spend. Let’s say you’re approved for 3k. That’s it, you can spend 3k but you’ll have to pay it back.

    You can pay it back in monthly amounts declared by your monthly statement/bill. If you only pay the minimum you’ll end up paying interest on it. And it will take along time to pay off depending on how much you spend. Or what you can afford to pay back

    Most credit cards do not have early payment penalties so you can pay as much as you want back as fast as you can.

  9. You purchase something with a bit of debt. The processor connects the vendor with your lender, so the vendor gets paid almost as quick as cash. The processor chargers the vendor a few cents for this service, that’s how they make money. At the end of the month, if you pay back what you owe you will be charged no interest on these mini-loans you accumulated, and you will build credit with lenders. If you fail to pay them back, the lender gets to collect interest from you at an eye watering rate. This is how the lender makes money.

    Overall, credit cards are great tools for building credit while you’re financially stable but become horrible temptations to trap yourself in debt during tougher times. Use caution.

  10. The company has money and is willing to pay now for something and have you pay them later with interest/fees.it then uses these fees/interest to cover costs and make profit.

  12. Credit card company pays for you, you now owe them. If you don’t pay back in due time they charge interest.

  13. Use it just like a debit card. Don’t spend what you don’t have. You want to use it to build credit and get rewards.

  14. Instant, high interest loans with a grace period before interest starts. And usually some kind of cash back or airline points for getting said loans.

  18. You get a card with limit. Lets say $1000. You buy a chair for $400 with credit card. Each month you pay credit card company minimum payment of 10$ until you pay back the $400 for the chair. Should take 40 months. The card adds interest to the payment for their profit. So the minimum is actually $11. But still takes you 40 months to pay. The card company makes profit of $40.

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