Credit cards... how do they work? (serious thread)

buckeejit

buckeejit

buckeejit

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Serious question here and sorry but I am actually simple :rolleyes:

I have a credit card and the limit is £1000 and the balance is -£948.63 so I have an available balance of £51.37.

Do I actually have £51.37 to spend? If I were to draw money out, I know there would be a fee so would draw out less.

I'm currently paying £32 off this card each month as I'm out of work and can't afford anymore. The APR is 29.9% (I know, shocking!)

What I can't work out (again, I'm simple) is that if I spend the £51.37, what will happen when the interest etc. is added on in the middle of the month (as usual)? Will I be over my limit of £1000?

Sorry for this stupid thread but if someone could answer my questions then that would be great :confused:
 
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buckeejit said:
Thank god it's just not me :D unless you're being sarcastic? :(
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I'm not being sarcastic. :)

I reckon you can spend ALL the £1000 (in your case) but it will keep going up with the interest...so £1050, £1100 and so on or whatever it is but you can't spend any of it as obviously you're over the limit...perhaps?
 
If you spend the money the interest will put you over the limit when it is applied. Your next minimum payment will bring you back under your limit. It is possible that your fees that put you over the limit will cause you to incur charges as well.
 
Syla5 said:
If you spend the money the interest will put you over the limit when it is applied. Your next minimum payment will bring you back under your limit. It is possible that your fees that put you over the limit will cause you to incur charges as well.
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I don't understand this as it says available cash balance :(
 
Syla5 said:
If you spend the money the interest will put you over the limit when it is applied. Your next minimum payment will bring you back under your limit. It is possible that your fees that put you over the limit will cause you to incur charges as well.
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unfortunately so
 
You can spend up to your credit limit. That doesn't mean you stop getting interest applied come statement time.

Situation
1k limit
Spend 1k
1 month later statement comes through
Balance 1k+ 50interedt
You own 1050 min payment would be a minimum of 50


It is unlikely that you would get any additional charges because of this, however I don't k ow which credit card company so I can't guarantee that.
 
Depends on the card. However the normal situation is min payment is % of your balance, or nominal amount if balance below X amount. If the 50 is => the min payment % then you have met the requirement for the month. Most cc companies would be happy for the borrower not to be able to spend any more money and pay interest on the full credit limit each month, so they are not likely to force the borrower to pay of balance if they don't have to.
 
Buckeejit we are using random numbers to help provide an example.


In your case you can spend the 51.37. That's all you care to know.
 
buckeejit said:
okay :)

So, say I spent the available balance and this brings my balance to -£1000, I will have the pay the minimum payment and that's it?
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if the interest puts you over the £1k you will have to pay the full amount it goes over by and the minimum on the £1k

please ensure there are no penalty charges before doing this as wwll
 
You would be put in an over limit position by your credit card company if you spent the money, but shouldn't get charged, as long as you meet the minimum payment commitment before the due day.

What you often see is in this situation once the customer gets to their limit, and only make minimum payments they stay at the limit and just pay the interest on the borrowed money each month. As long as you don't miss payments you won't get charged late fees, and you shouldn't get charged over limit fees. Once you miss one payment in that situation, things can get messy with charges fast.
 
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Just FYI, it's not possible for us to give you a definitive answer because all credit card operators work differently. Some will charge you your standard min payment, some will charge you the amount you are over your limit + min payment amount. Some will apply over the limit charges as well.

However, you can spend the money, and as long as you don't miss a payment you should be perfectly fine. If in doubt, call them in the morning and they will explain 100% for you.
 
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