How Do Credit Cards Work and How to Control Yours

How do credit cards work

Having a credit card is something that can be very useful in helping you out in an emergency. However, how do credit cards work and how can you make the most of yours?

It is clear that you use your card to pay for things instead of using cold, hard cash. So, you need to know how to calculate credit card interest and make sure that you don´t pay more then you need to.

Calculate Credit Card Interest on Your Purchases

If you want to know how much interest you would need to pay for a credit card purchase then you can use an online calculator to do this for you. This might be enough to make you think twice about whether or not you really need to fund the purchase in this way.

After all, do you really need to buy that new phone or shirt right now or can it wait until you have spare cash available for it? This YouTube video shows how to calculate credit card interest.

Otherwise, if you have already used your card to pay for something then you will see the amount of interest noted on your next statement. The next video tells you how to understand your statement.

How to Calculate Credit Card Interest if You Pay the Minimum Repayment

While the amount of credit card interest you pay each month on a small purchase will be relatively modest, there is an issue you need to keep an eye out for.

This is; if you only pay off the minimum amount each month then you will probably just be paying off the interest amount each time. How do credit cards work if you only pay off the minimum balance? The original debt just stays there forever.

This means that the initial amount you spent will not really reduce over time, despite making your payments on times each month. This video shows how it works.

It, therefore, make sense to ensure that you always pay back the amount you spent as quickly as possible, thereby reducing the amount of interest you pay.

Avoid Impulse Purchases Where You Don´t Calculate Credit Card Interest First

Of course, if there is one big risk with owning a credit card it is that you could end up making impulse purchases that you end up regretting. This doesn´t just mean that leopard skin sofa and those giant fur boots that look like a pair of baby seals are clinging onto your feet.

Instead, it could mean any little treat that you pay for on your credit car without even thinking about it.

We all like to enjoy life but things tend to look less attractive when we realize later on that - oh dear – we actually have to pay for it now.

The way you choose to avoid impulse purchases will depend largely upon your personality. Some people simply have to remind themselves not to use their credit cards before they head out.

Others need to leave their card at home while others need to be tied up firmly by a group of well-meaning friends while someone cuts up their card into tiny pieces and feeds it to wild animals.

Whatever method you use for avoiding regrettable impulse purchases, you will save yourself some money and stress by being clear about when you should and shouldn´t use your credit card.

The next video gives you some more tips on this subject.

Use a Credit Card APR Calculator to Find a Better Deal

Ok, so let´s imagine for a second that you have reached this article a bit too late and have already maxed out your card on animal print furniture and wildly expensive bathroom accessories that even Mike Tyson would baulk at paying the price of.

All is not lost. If you currently have a big outstanding balance on your cards then it is time to work out how to get rid of it.

As we have already seen, paying off the minimum amount each month isn´t going to help you in the long run. However, what if you didn´t pay any interest for a few months?

If you can find an alternative credit card that offer a low or zero interest rate then it could give you the breathing space you need. Use a credit card APR Calculator to work out the difference if you need to. If not, you could consider moving the debt onto a personal loan.

This final video shows you how to calculate the APR on a credit card.

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