Credit Card APR Question

Karl.H_2

I would like to make money by using a credit card for all purchases (bills, food, clothes, etc.) which means money stays in my current account. Now, I am planning to pay off all the monthly debt each and every month (via Direct Debit), as I have no intention of spending money I don't have.

However, after lots of research on this website I have a question.

I understand that I am looking for cashback credit cards, with 0% for purchases, but here's my question: if I pay off all my debt each month will I have to pay anything, for example If I don't have 0% on purchases will I have to pay the high APR (usually around 15%)? Does it work by adding up all my paid off debt to calculate the charge or only unpaid debt?

I will be happy to switch cards as often as possible.

The reason I ask is because I cannot see how the card company will make money from people doing that.

Sorry, I am just confused. I have ordered Martin's book to see whether this has been cleared up – waiting for it to come.

I will look into Stoozing using Balance Transfers in a couple of years (if we still can) because I am trying to get a good credit rating, and have credit card experience, as I haven't had a credit card before.

CLAPTON

firstly : cash back cards are very useful if you always pay the full amount back each month and so pay no interest charges.
To avoid any interest charges you must pay the full amount each month and you must not draw cash from the card.

So for example, is you have a 1% cashback card (the best you can get excluding special limited period offers) then if you spend say 500 per month on the card you will earn £5 per month or £60 per year .. not massive but useful.
The good thing about these cards is that you just use it as normal and dont have to remember when the 'special offer' runs out and find a new card.

Secondly : If the card has a 0% on purchases for a limited period ..lets say 9 months, then obviously you will only want to pay the minimum (often 2-3% of the balance) each month and save the rest in a savings a/c ). If you spend 500 per month on the card and save the money in a saving a/c you will probably make about 60 in interest over the period.
As long as you pay the minimum amount each month and clear the balance by the end of the term then you pay no interest.
The draw back of these cards is you have to keep moving from one to another and you must be a very very disciplined person who reads and understands the small print.

Karl.H_2

Thank you very much.

The APR is simply unpaid debt then. I think I understand now; to not get charged I have to pay off in full the monthly debt, however during the 0% period I can simply pay off the minimum amount and not get charged. That sounds good.

Before I make any commitments, I will ensure I read Martin's book (when it arrives).

Thanks for clearing that up, and have a good day.