Confessions on Yik Yak | ok i am so confused when ppl talk about being in debt with their credits cards. like their bank gave them a limit of 10K but you don’t actually have 10K so how did you go in debt pls im dumb 💔

Yik Yak

Download

Join communities on Yik Yak Download

Confessions 1d

ok i am so confused when ppl talk about being in debt with their credits cards. like their bank gave them a limit of 10K but you don’t actually have 10K so how did you go in debt pls im dumb 💔

Anonymous 1d

Literally yes. They went to their credit limit and are unable to payback the credit card bill. Even paying monthly minimums interest can build up pretty quickly (and that’s where a lot of credit card debt comes from too

Anonymous 1d

like why’d you spend money you didn’t technically have? is that how they’re going in debt??

Anonymous 1d

So there’s two types of cards that people use: Debit cards and Credit cards. Debit cards are usually tied to a bank account of some kind and works exactly like you’re thinking “I put money in and I can spend that money but no more than that” Credit cards are card that you can use to borrow money for a short time before paying back what you borrowed (with some interest if not paid off monthly). The point of them is to borrow money now and pay it back when you have the funds

Anonymous

OP 1d

yeah pretty much people are spending the money the bank is letting them borrow but not paying it off so they are spending money they don’t have or atleast aren’t paying back

Anonymous

#1 1d

oh..that’s not smart, so when you get a credit card the bank lets you borrow like 1k-10k from them? then u have to pay it off right but what if i don’t want to use the money they’re telling me to borrow can i just not

Anonymous

OP 1d

yeah so that’s basically just the limit they are giving you! So you can borrow up to that but you do not have to if you don’t need it really only use what you know you can pay off which builds your credit score!

Anonymous

OP 1d

why do i need to pay off or borrow in the first place can’t i just deposit actual money i have to my credit card and use that

Anonymous

OP 1d

You can actually! It’s called a secured card

Anonymous

#2 1d

then what am i even gonna pay back each month then

Anonymous

OP 1d

The cash you put down is a refundable deposit that basically just sets your credit limit. Ei $500 deposit=$500 credit limit per month. You then pay back whatever you spend at the end of each month. When your balance is paid off and you close the account you get the $500 back (or some banks will graduate you to an unsecured traditional credit card and refund the deposit automatically)

Anonymous

#2 1d

sorry i’m a dumb 18 year old, since it’s my money that i spent in the first place why am i “paying back” wtv i spent to the bank?

Anonymous

#3 1d

Say you trip and sprain your ankle and the bill to get you checked out is $500 but you only have $250 in your checking account (VERY made up numbers but it’s the principle). You can use your credit card to pay off that bill that you just could not afford. So then at the end of the month you’ll get a statement saying what you owe and a minimum payment amount. As long as you pay that minimum amount every single month you won’t be in trouble

Anonymous

#3 1d

Anything not paid off at the end of the month gains some interest and will cost a little more the next month. Say your minimum payment was $50, your bill would then be $450 + the interest on that $450 for the month, but as long as you make sure you are paying MORE than that interest you will eventually pay it off; paying more and earlier helps out a LOT with paying it off, even just an extra $20.

Anonymous

#3 1d

*adding on a bit, make sure it’s more than the interest AND minimum payment

Anonymous

#3 1d

But yeah credit cards are meant for big but small purchases that are hard to budget for (think buying stoves or fridges, not buying a car on credit cards). They’re meant to be a short term assistance but if you aren’t careful with how you spend it can snowball into insane debt (interest on interest on interest…). But if you pay it off regularly and don’t use more than like 30% of your limit, you show to banks that you are responsible with debt and will help with buying car and house loans later