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  1. #1
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    Default How does a credit card work??

    We have never had a credit card and have never even looked into one.

    We are considering getting one to help save interest on our mortgage but I have no idea how they work!

    The one we are looking at has an interest free period of 62 days but you have to pay a minimum monthly amount.

    So say if we used it to purchase all our groceries, pay bills etc would we have to repay what we spent at 30 days or 62 days?

    I hope this makes sense to someone because I am so confused

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  4. #4
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    So if you pay it monthly, what is the point of the 62 days interest free?

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    Normally credit cards are up to 55 days interest free
    Your statement is issued on the 30th day and is due 25 days after that
    Meaning you will make a payment each month but it will be for purchases made up to 55 days ago
    For example if you purchase something on day 1 of your statement you will get 55 days if you purchase on your last day of your statement you get just the 25 until it's due!

    It is a great way to save interest as you use the banks money to help you save on your home loan
    you just need to be able to stick to a budget for it to work
    If you spend too much or don't pay it in full on the due date you will be paying heaps more in interest than your home loan rate

  6. #6
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    because not everyone pays it off completely every month so if theres money still owing they dont charge you interested for 2 months

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    Because they're banking on you only paying the minimum amount, not the whole balance thinking "of I've got 62 days to pay" and you totally blow off that deadline by forgetting or not being able to afford it, and suddenly you're paying 24% interest. Anyone who is telling you that by getting a credit card will help you pay off your mortgage quicker is a liar and works for a bank. They are handy for other things - online shopping, travel etc, but they do not ever 'save' you money.

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    Quote Originally Posted by Hulahoop View Post
    Because they're banking on you only paying the minimum amount, not the whole balance thinking "of I've got 62 days to pay" and you totally blow off that deadline by forgetting or not being able to afford it, and suddenly you're paying 24% interest. Anyone who is telling you that by getting a credit card will help you pay off your mortgage quicker is a liar and works for a bank. They are handy for other things - online shopping, travel etc, but they do not ever 'save' you money.
    Of course they can save you money??

    You just have to use them properly.

    I don't work for a bank.

  9. #9
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    Ok it all makes a bit more sense now.

    We were going to put all of our money on our home loan, wait for the interest to be taken out then withdraw the money to pay off the credit card.

    So as long as it all works smoothly, I would have thought we'd end up saving a fair bit of money...?





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    We do it - stick to a budget and always pay the full amount due so have never paid interest on the credit card.

    You need an off set home loan though which means if you have more cash in the bank you pay (a little) less interest on your home loan.

    In the big scheme you aren't saving huge amounts so if you don't think you can stick to it - or you even end up paying little amounts of interest on you credit card it is not worth it.

    Don't forgot you might have to pay a yearly fee for the credit card so it may not be worth it in that regard too.


 

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