Credit Cards

United States
February 6, 2011 8:50am CST
I have a question and hope someone has some sort of knowledge about it. I am currently a college student, wife, and mother. I have never in my entire life had a credit card (by choice). It is not that I can not handle it but I never really thought I needed one. But the older I get the more I realize that I need to gain some sort of credit. I am not looking to put a bunch of money on a credit card but to use it for groceries to just turn around and pay it off (to gain credit). Also the better my credit score the lower rates could be in the future for me. I recently applied for a student credit card. Since I do not have any credit the APR is 19.8%. I do not see anywhere where it states the amount of interest that would be applied so is the APR how much I will pay out based on the amount for every purchase I make?
1 person likes this
7 responses
@owlwings (37283)
• Cambridge, England
6 Feb 11
You shouldn't get a credit card to 'gain credit'. The best use for it is to aggregate payments for things so that you can pay for them all at the end of the month (or whenever) when your paycheck arrives. Some people use them in order to pay for things which they don't have the ready money to pay for right away. This is a quite expensive way of managing your money but it may be convenient or the only way for them. APR stands for Annual Percentage Rate and is equal to the rate you would pay in a year if your outstanding balance over that whole year were constant. That is, if you owed $100 for a whole year at 19.8% APR, you would pay the credit company $19.80. If you owed the credit company $100 and paid it off after 6 months, you would only pay them $9.90 and so on. Usually you are not charged interest on your balance for up to 56 days, so if you pay off your outstanding balance every month ON TIME, you will pay nothing for the privilege of being able to pay your debts all off at once when it's convenient to you.
• United States
6 Feb 11
Is APR still applied if my balanced is always paid. Lets say I go to the store and purchase groceries at 100 dollars and 2 days after that transaction I pay the 100 dollars. Is APR still applied to that?
@owlwings (37283)
• Cambridge, England
6 Feb 11
It depends on the MONTH (or 'transaction period) in which the payment happens. If you bought $100 worth of groceries, and paid $100 into your card account before the 'due date' for your next statement, you would pay no interest. If you let the balance carry over to the following transaction period, you will be charged interest at 1/12th of 19.8% per month. The average time between 'transaction periods' is 28 days, so if you buy something with your card at the beginning of a 'transaction period', you won't be charged interest for it until the END of the next 'transaction period', which is why you have UP TO 56 days interest free credit. All a little complicated, perhaps, but so long as you remember to pay off your card in full before the end of every month, you will not pay a cent in interest!
@ebuscat (5949)
• Philippines
7 Feb 11
For me it is good if you can manage your money work of it so be courage.
@shuley (369)
7 Feb 11
When you pay your credits on credit card it should be on the covered period within a month for no interest. Credit card is for convenience when you don't want to bring money or had something to buy and run out of cash, but sometimes you tempt youself to buy anything and shock when the bill arrived. This was happened to me, so I cut my card to stop myself on using credit card.
@ladym33 (11009)
• United States
6 Feb 11
If you pay off the credit card within the payment period you will not have to pay any interest at all. That will be the rate that you will have to pay if you don't pay it off in full, it is broken down in to 12 month intervals so you don't pay 19.8% per month. However, that is a really large interest rate, so I advise that you pay it off every month and not incur any finance charges. Be careful with credit it is really hard to get in to trouble with it. Just always pay it off every month then you won't have to worry about those interest charges and your credit will be tip top. After you have established some credit, apply for a card with a better interest rate or a negotiate a lower rate with the company that gave you the student card. If you pay on time all the time they will likely be willing to give you a better interest rate over time.
• India
6 Feb 11
Hi I think you should consult any good financial adviser or relationship manager of your nearest Bank for correct info.
@kingparker (9699)
• United States
6 Feb 11
Well, basically, if you don't want to have APR interest applied to you, or you don't want to owe any debt, at the end of each month, you simply pay off the balance with a full amount of check, then you should be okay with it. If you want to maintain your good credit score, do not use your available balance over 30% or above. Because that might lower your score though.
@ptower76 (1619)
• United States
6 Feb 11
The APR is the amount that will be added to your balance and calculated after each payment you make. It is really quite high so I would be careful. But there are also other fees that are applied when you make charges on your card. For example, find out about finance charges and transaction fees on your card. Credit cards can make life a bit easier but have such a potential to do much harm. I believe the best thing is to pay your entire balance monthly. Builds your credit and minimizes your interest and finance fees.