Credit Card Payments Explained (Beginners Guide) - YouTube

Now I know this stuff is boring but if you're  using a credit card you need to understand the  

basics of how you can make your payments because  honestly if you're relying on the credit card  

companies themselves they're not going to give you  much of this information in a way that makes sense  

so i'm going to go over the four different  options that you have for your payments  

so that the next time you pay off your  credit card you can make a better move  

so as far as the payment options go every  single time that you pay off your credit card  

you're going to have the option to pay a minimum  payment the statement balance the outstanding  

balance or any amount and so we're going to go  over each of those and hopefully you guys can  

make more sense of what they all mean so we'll  start with the minimum payment here because this  

is always the easiest one to pay but the problem  is is that it's also the most expensive one to pay  

because typically you're only going to be  paying about one to three percent of your  

total balance as far as the minimum payment goes  but this includes interest so a lot of the time  

this can take you years we're talking even more  than a decade to pay off your current balance  

if you continue to only pay the minimum balance  because if you owe two thousand dollars on your  

credit card and let's say your minimum payment  is only 30 bucks well in reality you could pay  

25 towards interest and only five dollars towards  your principal balance every single time you're  

making that minimum payment so as you can see this  could take a very very long time to pay off that  

balance because you're paying so much interest and  so little towards your actual balance so my advice  

is that you avoid paying the minimum payment  at all costs unless it's absolutely necessary  

because honestly you do want to make that minimum  payment at least so that you don't accrue any late  

payments or anything that's going to hurt your  credit score but that minimum payment is always  

going to be very expensive and if you are only  making the minimum because that's your only choice  

i would probably stop using the credit card  and get that thing paid off as soon as you can  

now the next option that you'll have is called the  statement balance and this is basically everything  

that occurs within your billing cycle which is  typically about a month's worth of spending and  

when i say spending i mean spending on the credit  card returns and maybe even interest if you're  

accruing any so basically everything that happens  on the credit card within the billing cycle  

ends up on your statement balance now the  statement balance is actually the most important  

one that you need to pay attention to because as  long as you pay off the statement balance in full  

every single month by the due date then  you're not going to be accruing any interest  

and so this is a very good thing if you don't  want to pay any interest on your credit card  

as long as you pay that statement  balance off in full every single month  

by the due date but just be aware that you  have to pay off that statement balance in full  

so if you owe a thousand dollars on your  statement balance and you pay 999 dollars  

by the due date then that one dollar that  you're leaving left over is going to open  

up interest and now you're accruing interest and  usually the only way to get rid of the interest  

is to pay off that statement balance in full by  the due date for usually a couple months in a  

row and that's typically the rules that the credit  cards have so if you technically want your credit  

card to be free to use then just make sure to  pay off that statement balance in full and that  

is the main option that you always want to pay  attention to to have interest-free credit card use

now the next payment option is called the  outstanding balance or the total balance and what  

this means is that it's your statement balance  plus any new purchases that you've made that  

aren't pending anymore so for instance if your  statement balance ended two weeks ago and you've  

made a lot of purchases since then then all of  those purchases are also going to add on to that  

total balance or the outstanding balance now you  do not have to pay off your entire outstanding  

balance in order for the credit cards not to  charge your interest you just have to pay off  

the statement balance but if you really want to  go ahead and pay off that outstanding balance  

and you have the money to do it then go ahead  because it's probably just going to be easier  

on your budget and you can get more on top of  your spending as far as the credit cards go  

now the final option you have to pay off your  credit card i would just call it any amount  

and i personally use this all the time because  what you can do is you can select any amount you  

want to pay towards your credit card so if your  statement balance is a thousand dollars and it's  

due 20 days from now then tomorrow you could just  pay a hundred dollars as the any amount option  

and now you only own 900 and you can just do  that as often as you want during the month  

just to pay down your credit card so either you  can pay off your statement balance you can hit  

it towards the outstanding balance or you can  just slowly get towards your minimum payment  

if you're going to choose that option so the  main point here is that you're not restricted  

just to make one payment per month you can make as  many payments as you'd like and you can make them  

for any amount that you want to and you're never  going to be restricted to have to pay a certain  

amount of money towards your credit card but i do  want you to be aware that all of these different  

payment types are going to be a lot easier if  you're using the online services or if you're  

calling your credit card because if you're just  relying on a monthly invoice to come in the mail  

these payment options aren't going to be as easy  and you really need to be using your telephone  

or the internet for this stuff to happen now  if you're interested in learning more about  

credit cards like how minimum payments work  or how the interest is charged go ahead and  

check out this playlist over here because i'll  link all my different credit card videos so you  

guys can learn more about them but thank  you for watching this one have a great day