How credit cards work?

[Catsansan]

Hi. I thought it would be a nice idea to use credit card on daily basis to earn points and put the money on saving account instead. When salary was paid I covered my say -1500. A few days later I’m checking and I’m minus (say 300) and I didn’t spend that much I look at transactions the sums don’t add up, so it must be something that wasn’t there when I was paying 1500. I cover that exact 300 again and now I have positive 100 balance . Numbers are estimates not exact. What is going on please? It’s only been a few months since I’ve been using credit card this way

I am confused - please can you elaborate??

If you don't understand how a credit card works please don't use it until you learn. You will end up in debt if you are not careful.

I suppose I assumed if I make the payment within a month of the spend then no interest? But the interest is charged on a specific day you can set?

I'm not sure what you mean. Are you saying you've paid it off in full and another 300 quid went on?

Maybe it was pending.

Totally confusing.

Please don't use something you don't understand, it could end up very expensive

It's actually pretty straightforward, you get your statement, it tells you how much your full balance in and you pay that before the due date

No interest on the credit card, interest on savings

Dont try to over complicate it

The best way to do this is to set up a direct debit to pay off the full statement balance each month. If you try to pay off the balance before the statement is generated, it could lead to discrepancies - particularly if you obtain refunds on items etc.

Unless you're dealing with very high figures and using the highest easy access savings rate, you're unlikely to generate significant income this way.

For a credit card, you would spend in month 1, then when your statement is generated at the end of that period you usually get a further month to pay the balance without accruing interest (depends on the card, if you've withdrawn cash you may be charged from the date). It is difficult to confirm what has happened without seeing a statement, but sounds like it may be something to do with purchases in 2 different periods.

I presume you have set up a direct debit to simply pay the credit card balance in full every month? If so then there is no need to worry. As long as you track your spend on the credit card and ensure you always have enough to pay it off in your current account.

Usually you get a credit card statement on x day every month. But usually they don't take the money on the direct debit until a week or so after the statement is issued. So you have a little time to ensure your current account has enough money in to pay the credit card bill.

I suspect what is confusing you is the difference between the statement date and the payment date.

Let’s say your statement date is the 1st of the month, and your payment date is the 15th of the month. You spent £1,500 up to the 1st of the month, so that’s what’s on your statement. You pay that on the 15th of the month. But between the 1st and the 15th you have spent another 300. That will go on your next statement, generated on 1st of following month, for payment on 15th of following month.

You spend on the credit card, wait to get your statement as your credit card 'month' does run like a normal month (e.g. mine is the 10th to the 9th). Then you pay what the statement says by the date it says and no interest is charged

Wait for your statement. Pay what you owe by direct debit (if you pay the full amount you pay no interest). It's not complicated

Pre-authorisation amounts (sometimes known as holding or pending) by, for example, hotels and petrol stations, can alter your balance for short periods. Pending (very recent) transactions can appear before they register fully. Worth being aware of. Another thing - beware of 'continuous (or recurring) payment authority'. A bit like direct debits, but not as regulated.