Question


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how does credit card work?

if i am right, credit card is able to withdraw money from atm machine, is that meant it needs a balance in it? or it is just a card that links to the bank account like normal atm card? what if i purchase an item with credit card and my balance in the bank is enough for the item, will it be deducted from my bank account or it is taken as credit that i have to pay later?

6 months ago - 4 answers

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credit cards dont take money from accounts, they charge you by sending you a bill at the end of the month. You can buy things with money you dont have. If you have enough money in your bank account it wont be deducted unless you use a debt card i think. Dont spend a bunch on a credit card though because if you cant pay the bill on time then your interest rates will go up and your credit score will get low.

by Art

6 months ago

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Other Answers

it is tied to a loan. when you use card your loan balance goes up. If you pay the entire balance there is no interest expense. If you use it to obtain cash from an ATM it is also a loan. it has a fee attached to it and it begins accruing interest immediately. This is a horrible way to use a card.. Never use it to take cash. Always us it at a retailer.

by David Z- 6 months ago

You're thinking of a Debit card. Debit cards are from the bank and are attached with your bank account. If you withdraw more than you have you will be charged fees that you'll need to pay, which is pretty irresponsible and stupid. Credit cards are like spending money you don't have. When you spend the money the credit card company will send you a bill every month and you'll notice on the bill that the balance is more then you spent. That's because they charge interest for every dollar you spend. Debit cards are the way to go because you're spending YOUR own money - not someone elses. Personally I will never own a credit card but it is a good way to start building credit. Whether your credit is good or bad is up to you... you need to be responsible! Good luck

by alaska grown.- 6 months ago

credit cards are revolving loans or some people call them open-ended loans. any cash you get from an atm or purchases you make are added to your credit card balance (revolving loan). you are responsible for paying that balance. you do have a credit limit. in other words you can only charge up to a certain dollar amount which varies by account. typically the credit card company bills you for 10% of the months charges. don't fall into that trap. if you only pay the minimum amount due, you will pay intrest on the charges you made the previous month and it will take YEARS to pay off what you charged. pay off what you charge every single month and pay on time.

by Laura-belle- 6 months ago