Can someone explain credit cards to me?

[angel21]

I've never had one. In's and out's please.

[annie0000]

To add to ethel's reply.

Generally when you take out a card, your spending limit will be agreed at the outset, however, some companies will increase this if you reach the limit - not necessarily a good thing.

basically, if you are really well organised, like Ethel, then they are undoubtably an asset.

If you are not, then you run the risk of getting into debt very quickly - the interest on the cards (apart from introductory offers) tends to be higher than a loan and if you pay only the minimum, you could be paying back triple what you spent.

I have a credit card, but I use it for buying things on-line and for large items for the insurance, I do however pay it off monthly and it costs me nothing.

If I needed a large item urgently, and didn't have the money to pay for it, i would take out a loan and buy the item with my credit card and repay the card with the loan, then you have the insurance protecion and you have to repay at a fixed rate and are commited to paying it back in the time you intended.

[LoftyLottie2]

Angel - forget about credit cards giving you the 'life style you desir'e. They can make it easier to manage your money if used wisely like Ethel and Craft have suggested, so you might be able to save a little more each month, but your life style won't improve!

The situation we find ourselves in now is because people have been using credit to live their dream and now their dreams have turned into nightmares.

[craft1948]

I don't know how you are covered with your debit card - perhaps PayPal cover you instead of the credit card company - but anyway I like my Tesco points.

[angel21]

Annie, how come you take out a loan with a credit card when a credit card is in effect a loan? Sorry I just don't get it

[LoftyLottie2]

Large purchases are better made with a Credit Card. I always use mine to buy anything over �100 and to pay for holidays, air flights etc. The purchases are covered by the Credit Card insurance, unlike a debit card.

[angel21]

It sounds rather complicated to me. I think they would probably cause me more stress in my life really. I'm quite organised but I don't like the idea of constantly having to keep an eye on jiggling credit cards about onto 0% deals all the time. I'll stick to saving then spending for now I think. Some people have all these things though, like my friend is only 22 and she has a mortgage, furniture in the house, food, car bills, household bills, a baby on the way and is engaged so there will be a wedding to afford at some point? Her and her fiance both work full time but I just wonder how anyone manages to afford all these things especially at such a young age and I was wondering perhaps I am missing a trick with credit cards?

[angiebaby57]

do not have one unless u intend to pay the balance in full every month....it is a slippery slope!! xx

[rov1200]

Live now...pay a lot later!

[raysparx1]

Just one bit of advice angel if you have �1,000 debt on an average credit card and you pay back the minimum amount every month, it will take you nearly 20 years to pay it back, avoid them unless you can pay it in full as Ethel does every month, if you don't you will soon be in big debt.

[craft1948]

Don't bother with the card - just get married.....................

Dan was a single guy living at home with his father and working in the family business.
When he found out he was going to inherit a fortune when his sickly father died, he decided he needed a wife with which to share his fortune.
One evening at an investment meeting he spotted the most beautiful woman he had ever seen.
Her natural beauty took his breath away.
'I may look like just an ordinary man,' he said to her, but in just a few years, my father will
die, and I'll inherit $65 million.'
Impressed, the woman obtained his business card and three days later, she became his stepmother.

Women are so much better at financial planning than men.

[annie0000]

angel, i wouldn't take a loan out on the credit card, if you get a personal loan, you will pay an annual rate of interest (say 7%) over the entire term of the loan and have fixed monthly repayments that will pay it off. You buy it on a credit card and you are paying interest (say 3%) on the outstanding amount every month, it is also easy to say that you are a bit short one month and just pay the minimum, then what happens is that the money never actually gets repaid and you honestly cant even remember what you bought and before you know it, it spirals and instead on �1000 you are paying back �10,000 whereas with a loan you may pay back something like �1200 and it is done in a year.

[WhiteBear]

What i would say is, If you have enough spending money, then dont get one. Unless you need some fast loans, but remember they are not FREE, you will still need to pay it back

i don't own one. because there is no need.

[jno]

there is also the matter of convenience: instead of writing cheques (which these days are not accepted evrywhere) or getting money out of the bank frequently, you pay everything by credit card and pay off the bill with a cheque or a direct debit once a month. If you are the sort of person who goes in for impulse spending it may not be the best thing for you; if you are a moderately careful money manager who doesn't spend more than she has, they're handy. But do try to pay them off every month.

Go for Visa or Mastercard - American Express is often not accepted (they charge the shops too much commission).

[EverClean]

You can spend, spend, spend up to your credit limit and then claim poverty and tell the bank that you can't afford the minimum payments and just get away with an agreed payment (or even no payment)

Isn't this how these things work for many people nowadays???

The system is flawed and if you have enough balls to flaunt it - and few enough assets to go after then you may well get "the lifestyle you desire" and let the rest of us pay for it through increased bank charges, etc.

[andy-hughes]

The essential aspect of a credit card is money management. If you can use your card and pay off your balance every month in full, you can enjoy six weeks of free credit.

What the company rely on is that you will not pay off all your balance, and so their horrendous interest charges kick in.

For example - if you owe �1000, and you pay �999 on the correct day, you;d assume that you would be charged interest on the remaining �1. No, they charge on the whole �1000 until that �1 is paid off - and that's how they make some money off you.

Be careful, and strict with yourself, and it works fine, but most people don;t do that, which is why they can afford TV advertising and national mail-shots.

If you are at all unsure, steer clear.

[Velvetee]

Don't do it Angel. I think it's best to live within your means, buy when your finances permit.

It's so easy to get heavily into debt and then spend the rest of your life struggling to pay it off. I wish I'd never started my relationship with Mr Barclaycard and the others.

[Whoever]

Credit cards are a useful mechanism. They save you having to carry a lot of cash around and if you use them to pay for goods over the value of �100, you are protected by certain guarantees. However, for those who are financially ******** or not good at managing their money, they can be disastrous and lead you into debt, especially if you use them to finance a lifestyle you cannot afford. The only way to get the benefit from a credit card is to pay it off in full every month. If you don't ,you will pay high rates of interest on the balance outstanding. Some people use their credit cards to buy items in a sale at a discount of 10% or 20% because they don't have ready cash and pay for them on their credit card, not realising that if they don't pay off their balance owed at the end of the month, they will, in fact have lost the benefit of the discounted item and will have ended up paying a great deal more than the original asking price!