How do credit cards and their interest work?

Credit to Author: Staff Writer| Date: Wed, 09 Aug 2023 20:06:24 +0000

Sponsored Content

We’ve got simple answers to help you understand how credit cards work in Canada. Credit cards are not only great for shopping online or getting a cash advance, but they are also a great tool to build your credit history. To make sure you really use them to your advantage, this video will help you understand the basics like the way the interest and the minimum payment are calculated.

A credit card is a payment tool that allows you to buy stuff online.  The card issuer gives you a credit limit and you pay it off later.

You can also use it as a cash advance, which is a cash withdrawal made from your credit card. It can be really practical in some instances, but interest on cash advances is higher than on purchases.

Every month, your bank will send you a statement including your credit card balance, along with a minimum payment and due dates.

If you pay off your card in full by the due date, you won’t have to pay any interest on your purchases.  If you don’t pay off the full balance by the due date, interest starts to accumulate. The most important thing to do is make sure you pay at least the minimum amount owed by the due date. Managing your credit well will help you build your credit report, which will influence your credit rating.

A good credit rating is helpful when you’re buying a car or signing a lease on an apartment.

Some credit cards also offer other benefits like cash back and rewards. So, overall, a credit card is an important financial tool, if used responsibly.

For more answers and information, visit National Bank’s information hub dedicated to newcomers.

The post How do credit cards and their interest work? first appeared on Canadian Immigrant.
http://canadianimmigrant.ca/feed