I don't understand how credit card works

ConfusingCard

Hey,

This is my first credit card. I use it for all normal spending and then regularly pay off the full statement balance because cashback. There's a £500 limit.

I was really busy this past couple of weeks and forgot to pay off the balance. Logged in today and I'm at -£600. Immediately paid off the full *statement balance which was of ~£350.

Freaked out a bit because I'm over the limit even though I've set up alerts to tell me when I'm within £50 of the limit and haven't received anything. Logged in to my credit card online and it says my balance is £600, limit £500 but somehow I've still got £200 available credit to spend?!

I don't understand how any of this is calculated, I'm so confused and I don't want to get charged. Is anyone able to explain?

Thank you so much.

SeniorSam

At the end of each month, when you get your statement, if you pay it off in full, then you will not get charged. If you have a limit and exceed it, then you will be charged. Usually you will get full details when you take out a card and if you read it through, you should understand.

Sam

ConfusingCard

Whew! Thanks so much for your response! I feel a bit dumb but it's confusing!

What happens if I keep paying it off in the middle of the month? Is it like having "extra" funds?

How long after receiving your statement do you have to pay it off?

dzug1

It tells you on your statement when payment is due - usually several weeks after it's sent out


Paying significantly before this can lead to confusion on all sides

Caz3121

ConfusingCard wrote: »

How long after receiving your statement do you have to pay it off?

your statement with say what the minimum payment is and when it needs to be paid by
e.g. statement produced 12th month will have all the spending up to that date
payment due by 30th means anything after the 12th does not need to be paid till the following month (it will appear on the next statement) but everything included on the statement you have needs to be paid by the 30th to avoid incurring interest

When was your bill due to be paid? if you missed the payment date you may find you have a charge and interest
I would strongly recommend that you set up a direct debit - even if it is for minimum payment, as late payments will incur a charge and will may be logged on your credit file.

CLAPTON

you may wish to consider setting up a DD for the full monthly amount : that way you can never forget

ConfusingCard

dzug1 wrote: »

It tells you on your statement when payment is due - usually several weeks after it's sent out


Paying significantly before this can lead to confusion on all sides

I'm learning this now I think....

Caz3121 wrote: »

your statement with say what the minimum payment is and when it needs to be paid by
e.g. statement produced 12th month will have all the spending up to that date
payment due by 30th means anything after the 12th does not need to be paid till the following month (it will appear on the next statement) but everything included on the statement you have needs to be paid by the 30th to avoid incurring interest

When was your bill due to be paid? if you missed the payment date you may find you have a charge and interest
I would strongly recommend that you set up a direct debit - even if it is for minimum payment, as late payments will incur a charge and will may be logged on your credit file.

I need to pay it on the 30th of every month, so not there yet. I was advised not to set up a direct debit in case I need to contest any charges.

I regularly pay off the full statement amount during the month/whenever I log in to online banking. Minimum payment is always really small, like £5.

I've read all the blurb from the bank but I still don't get it. Maybe I will go in there and get someone to talk it through with me.

Thrugelmir

ConfusingCard wrote: »

I was advised not to set up a direct debit in case I need to contest any charges.

Who gave you this advice?

ConfusingCard

Thrugelmir wrote: »

Who gave you this advice?

A trusted family member. Is it bad advice? Their reasoning being that if something does happen you won't be £ down whilst it's getting sorted out.

grumbler

ConfusingCard wrote: »

...Logged in today and I'm at -£600. Immediately paid off the full balance which was of ~£350.

I don't get it.
Was the balance £600 or £350?
Pending transactions can affect the "available to spend" amount, not the current balance.

ConfusingCard wrote: »

A trusted family member. Is it bad advice? Their reasoning being that if something does happen you won't be £ down whilst it's getting sorted out.

You have 20+ days from getting a statement to report unauthorised transactions if you find any.

ConfusingCard

grumbler wrote: »

I don't get it.
Was the balance £600 or £350?

Balance = -£600 Available: £0
Pay full statement balance option = £350 (sorry forgot this in OP)

Then when I log in to my credit card online it says: Balance -£600, limit: £500, available: £200

I'm also confused as to how I managed to go over £500 on the card without getting a limit alert.