That you know how a credit card works allows you to use it properly. Also that you avoid falling into arrears with your payments, which implies a stain on your credit history.
What is a credit card?
A credit card is a plastic identification instrument, which allows you to access consumer credit. The type of credit offered by this card is revolving; that is, it does not have a fixed number of payments.
In addition, it is a means of payment accepted by countless companies of goods and services. Therefore, you can use them in your purchases, avoiding the disbursement of cash. You can also, under certain conditions and in some countries, use it as a means of international payment.
How does a credit card work at the time of purchase?
The operation of the credit card at the time of purchase is simple, you just have to present it. Most likely they will require you to additionally show an identity document, to certify that the card belongs to you.
Once the card is read by the electronic reader (point of sale), the operator places the purchase amount. The information is sent to the bank, who determines if this amount is within the range of credit you have. If so, proceed to accept the purchase, and if not, reject it.
Once the purchase is made, the money is transferred by the financial institution to the seller. This is done following a mechanism pre-established by said institution that the seller knows in detail. Mechanism that requires absolutely nothing for your intervention.
How do I pay my debt?
Monthly, the corresponding financial institution sends you a statement, which summarizes the rationed information with its use. It includes the purchases you made, cash provisions, payments that you amortized to the credit and commissions. Likewise, indicate the deadline to make your payment and the minimum amount to be settled, if you are going to resort to financing. Also, the amount owed, which you must pay to avoid incurring financing and paying interest
With all that information, you decide how to handle the debt generated with the use of your credit card. You can cancel a value located between the minimum payment and the total of your debt, before the cut-off date. As the payment becomes less, the greater the amount you must pay in interest, and vice versa.