How do credit cards work?

[Lifeoverhaul]

Daft question but how do credit cards work? I don't understand the whole paying the minimum off, how much interest you pay etc.

I do have a credit card but the whole balance is just taken out of my current account on the 2nd of the month (so in reality is only useful if I want to delay paying for something until after payday).

I'm desperate for a holiday but can't afford it in one go but could afford to pay off £200 per month if I could change my credit card settings to pay off small amounts. I know I should wait until I've saved up and go then but I feel I would really benefit mentally to go away soon.

You'd need to look at the interest rate on your particular card. Or you could apply for a 0% card if you thought you'd be able to pay it off within the 0% period. Each month your statement will show your minimum payment and then you pay the amount you want (£200?) as long as its the same/more than the minimum due.

In your situation I would open a new credit card which offered 0% on purchases deal. Buy holiday, make at least the minimum payment each month, and make sure its paid off before the promotion has expired!
Check out martin Lewis' website...he will have the best deals listed on there!

Thanks. That sounds like a good plan.

Would your mental health not benefit just from knowing a holiday was coming in a few weeks? Could you put down a deposit and pay the balance a bit nearer the time?

Credit cards are very much best used the way you are using yours now. I would only put a big purchase on it and pay off less than the full balance if I needed something as an emergency (exploding boiler, unexpected car repair etc).

Moaning Minniee - I can only go away at certain parts of the year due to work.