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by barbusy on December 10th, 2004

barbusy

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What is a credit card?

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  • by crunchyfrog on December 18th, 2004

    crunchyfrog

    It's a card issued to you by a bank or some other lender that allows you to 'pre-spend' money. Basically, they will give you a limit - it could be as little as a couple of hundred dollars for a first time credit card, up to very large amounts of money - as a student, I have been offered a $25,000 card, so I can only guess at the numbers that very rich people play with. You can then spend up to this limit with the card, without having to initially pay anything to the bank or lender - but there is, as always, a very large catch. The card will probably have high interest charges and you will be required to make payments on the card depending on how much you have spent; the more you have spent and the less your repayments are, the more you will have to pay in fees and interest. I would suggest talking to a financial planner or a bank that is NOT offering you a card before taking one, as if used incorrectly, credit cards can cause much hardship.

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    • Thank you for the reply. I'm interested in spending the money I have in my bank account (without 'pre-spending') as often I see that I could get some extra discount if paying with a certain credit card. In that case, do I still need to pay the interest? Or should I simply stay away from this plastic?

      barbusy

      by barbusy on January 28th, 2008

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