How Does A Credit Card Work? Beginner Guide 101

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The complete guide to credit cards which explains everything from what a credit card is, everything about how it works, balance categories, credit limits, how fees and interest work and everything in-between.
There is a lot of information in this video where I try to cover as much as possible about how credit cards work starting with the application process and the way credit cards make decisions through to the different ways you can make payments.
If you are a beginner or new to credit cards and want to get the definitive 101 guide, this should help understand exactly how credit cards work and all the key concepts.
If you're not sure what the credit card monthly cycle is, how different types of balance work or what trailing interest is, you'll know everything by the end of the video.
Here are the key chapters - feel free to jump around the different parts to find bits that you're interested in or go back to a part that you want to watch again.
TIMESTAMPS
1. Introduction - 00:00
2. What is a credit card? - 02:23
3. Credit card application process - 03:51
4. Types of credit cards - 07:54
5. The credit card monthly cycle - 09:10
6. Balance categories - 10:55
7. Credit limits - 12:54
8. Credit card interest - 14:06
9. Credit card fees - 20:29
10. Credit card payments - 23:43
11. What happens if you don’t pay your credit card - 28:30
12. Benefits of using a credit card - 30:20
13. Conclusion - 34:16
Here are some more helpful videos to understand how credit cards work.
HOW CREDIT CARDS WORK
○ 8 Mistakes To Avoid When Applying For A Credit Card - • 8 Mistakes To Avoid Wh...
○ Best Time To Pay Your Credit Card - • When To Pay Your Credi...
○ What To Do If You Miss A Payment - • Missed A Credit Card P...
○ What To Do If Your Interest Rate Is Increased - • Rate Hiked On Your Cre...
○ 5 Ways You May Get A Credit Limit Increase - • The 5 Ways You Can Get...
○ How Credit Cards Help You Build Credit - • Do Credit Cards Help Y...
○ Credit Card APR Explained - • Credit Card APR Explai...
○ How Credit Card Interest Works - • How Credit Card Intere...
CREDIT CARD TIPS AND GUIDES
○ How To Build Credit Using A Credit Card - • How To Build Credit Us...
○ How To Get Approved For Credit - • REVEALED: How Credit D...
○ What Income Should You Put On A Credit Card Application - • What Income Should You...
INTERESTING THINGS ABOUT CREDIT CARDS
○ How Credit Cards Get You To Pay More - • 8 Ways Credit Card Com...
○ Best Cashback Credit Card (UK) - • Best Cashback Credit C...
○ 8 BIG Differences Between US and UK Credit Cards - • 8 BIG Differences Betw...
○ Why Credit Cards Are NOT Unsecured - • Why Unsecured Credit I...
○ 9 Credit Card Mistakes To Avoid - • 9 Credit Card Mistakes...
○ How Many Credit Cards Is Too Many? - • How Many Credit Cards ...
○ Best Credit Cards For Beginners (UK) - • The 6 Best UK Credit C...
○ Credit Cards vs Charge Cards - • Credit Cards vs Charge...
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DISCLAIMER: Some of these links may be affiliate links. If you purchase a product or service using one of these links, I will receive a small commission from the seller. There will be no additional charge for you.
DISCLAIMER: I am not a financial advisor and this is not a financial advice channel. All information is provided strictly for educational purposes. It does not take into account anybody's specific circumstances or situation. If you are making investment or other financial management decisions and require advice, please consult a suitably qualified licensed professional.

Опубликовано:

30 июл 2024

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Комментарии : 103

@SashaYanshin 3 года назад

It's a long one, but I really tried hard to pack as much information in as I could! Hope somebody finds it useful!

@serenahussain2072 Год назад

I wish we are taught some of these things at school and their importance. I just turned 28 and I have never had a credit card and its so daunting applying for one not knowing what I may be getting into.

@zeustn9525 Год назад

I wish we stop using the credit score system. Many European countries don't and for a reason. It's complicated, most people don't understand it, it's not transparent and worst of all, it's designed to encourage spending and debts.

@kerr4926 Год назад

@zeustn9525 yeah that's why countries like the UK use it. These credit companies profit off of people having poor credit and debt :(

@deltaechomusicnh555 5 месяцев назад

@zeustn9525 Credit scores means nothing in the UK. It's just a marketing thing that the likes of Credit Karma use to get you to spend money. What lenders care about in the UK is your history on being about to make payments on time.

@oliverflores3771 Год назад

Hey man your video really help out alot. I like how clear you explained everything. I'm definitely following you

@lievenm2661 2 года назад

Sir you’re doing absolutely an awesome job walking the masses towards financial freedom! Comparison with US ( Canada) is super useful!!! Please I think everyone would like your deeper emphasis on cc interest rates and the notion of daily compounded rates which I think most viewers are unaware of. Keep these vids coming and thank you for the wholesome knowledge! Most tubers on these topics should close their books and learn from you.

@vanmaisterz 3 года назад

Finally, the video that I was looking for! Thank you Sasha, very very useful

@SashaYanshin 3 года назад

Hope it was useful!

@leonardestrella541 3 года назад

Great video Sasha once again jam packed with valuable info. Thanks for the effort sir .

@SashaYanshin 3 года назад

Thank you Leonard! Not the kind of video that goes viral or earns a tonne of views on day 1 but hopefully some value in there for people over time :)

@asdfghjkl-fh3cj 3 года назад

Great videos mate, really helping to make sense of all this

@SashaYanshin 3 года назад

Thank you! Really appreciate it!

@Nevermore101 2 года назад

Great video, super helpful to get my head around how these things work - thanks!

@SashaYanshin 2 года назад

glad it was useful!

@andygs0306 3 года назад

Great video! Very informative and it helped me learn a few new things.

@SashaYanshin 3 года назад

Thanks Andrew and glad you found it helpful!

@aigerimsadyrova6174 3 года назад

The comparison with US credit system is super useful. Thank you for the video!

@SashaYanshin 3 года назад

I'm glad it helped!

@namangupta5330 3 года назад

Great video, really informative! 👍

@SashaYanshin 3 года назад

Thank you!

@andreiasantos9811 3 года назад

Thank you for the video! So useful

@SashaYanshin 3 года назад

Glad it was helpful Andreia!

@sunnie1638 2 месяца назад

Thank you so much for this video. I was so stressed trying to understand credit card terms and every video I saw threw around lingo without properly explaining them in a way that's understandable (aka how you would explain it to your grandma). This was perfect.

@alottoftea Год назад

This is the most informative credit card video I've watched - thank you!

@SashaYanshin Год назад

👍

@Dragonadvisor 3 года назад

Thanks so much for the info please continue to do these even though it might seem unprofitable by the veiw count, just means the wise and open minded or few but hopefully the rest comes around.

@SashaYanshin 3 года назад

Thanks for commenting! And yes - I try to balance between providing some in-depth pieces like this that I think will help some people in the long run and those on more popular topics. Hopefully this type of video picks up at some point in the next few years if enough people find value in it 😃

@moseschali 2 года назад

Hi Sasha, great video but quick questions. If I have a minimum payment to make in a month. What happens if I don’t spend any money on my credit card that month? Am I affected in any way?

@kingbow9928 3 года назад

Great video, very informative 👍

@SashaYanshin 3 года назад

Thank you! Hoping that this is one of those that will be a slow burner over time. 😀

@deansmith4037 Год назад

Sasha thanks mate , I've used credit cards instead of a loan or finance on a car because I chose how much I pay and I like to pay quickly.

@theolynwarrender 2 года назад

Fantastic video thank you so much

@SashaYanshin 2 года назад

Thank you for watching! Glad it’s useful!

@carlpoynton5231 3 года назад

I'm grateful for your videos..thank you

@SashaYanshin 3 года назад

Thanks Carl! Glad it was useful!

@spellerwix 3 года назад

it certainly was a long one, OW ER..but another great video, lots of information !

@SashaYanshin 3 года назад

Believe me - I was trying to condense it as much as I could cutting stuff out when I was planning it out AND in editing. :)

@kevinhughes9801 3 года назад

Excellent breakdown thanks

@SashaYanshin 3 года назад

Thanks Kevin! :)

@marcustinley2801 2 года назад

Incredible content

@SashaYanshin 2 года назад

thanks Marcus!

@nickkarafillidis4637 2 года назад

nice infos! Thanks

@SashaYanshin 2 года назад

Glad it was useful!

@user-hh2is9kg9j 2 года назад

Thank you Sasha.

@SashaYanshin 2 года назад

Glad it's useful!

@HQ4575 Год назад

This is amazing! Thanks. I'm a new student immigranting to the UK and we didn't use CC's back home, this tells that i probably shouldn't get a credit card until i have a decent job post-grad. Would that decision harm me in anyway in the future?

@htsunmiku Год назад

I've been using PayPal pay in 3 alot but I realise I should probably just get a credit card. I basically just want something to spread the cost and simply have a set payment for a few months. I'm assuming a purchase credit card (during 0% interest promotional period) is the most similar? I never spend outside of anything I couldn't afford outright. It just makes me feel better to split a big purchase down to 3 or 4 installments.

@nivea123 Год назад

You mentioned in the video...Where's the link in the description for the tesco banking credit card?

@CrumbsOfHeaven 4 месяца назад

This was a great video! Thank you! I'm still a bit confused with what the APR is. I've been suggested a Zable credit card which is 48.9% Variable APR. This is quite high considering you said that around 20% is high. I still dont understand what it means for me paying it back? I only want to buid my credit score so I'm only going to make a few purchases of around £20 each month and pay it back. Would the APR mean I'd need to pay them money at all if i was doing this? They have 0% interest as well so thats why im also confused with the interest and yhe APR. Credit cards are too confusing 😂 Thanks!

@Falky1 Год назад

Thanks Sasha!

@SashaYanshin Год назад

👍 Glad it was helpful!

@chrisscott7123 Год назад

@@SashaYanshinquestion when you spend money on your credit card will you need to pay interest

@kelisa4894 Год назад

brilliant video. as a young person who had no idea how credit cards work, i feel so much more informed. thankyou! would you recommend a 18 year old to get a credit card?

@SashaYanshin Год назад

It’s a 2-way street. On the one hand a credit card will be amazing at helping you build credit - this is super useful should you need to get a loan or a mortgage or whatever in the future. On the other hand, if you don’t repay in full and get tempted into debt, it can start a long cycle of perpetually living in debt or worse. Guess it really depends on how well you think you can manage the credit card 👍

@3z3193 11 месяцев назад

Hi for example my limit is £1300 and l transferred for example £100 in my credit card l am not intending to use it yet l have paid the fee for the transaction and l have not use the £100 yet woulf l still be charged next month?

@lanapodiava3899 2 года назад

Hi Sasha, could you advise me please on this situation? Let's imagine I bough a piece of clothing with a credit card & I would like to return it. The retailer will be able to send the money to the credit card with no problem? Will this affect my credit score at all? Many thanks in advance :)

@SashaYanshin 2 года назад

Yes - the retailer will be able to refund the payment and absolutely zero impact on credit.

@rasmachris94 2 года назад

I'm sat here understanding everything you're saying. But fundamentally what's the point? To build Credit Score? Only thing you'll need that for is a mortgage or any long-term loan. But even so, seems high risk with an almost ethereal reward.

@SashaYanshin 2 года назад

There’s a load of good reasons. One of my very first video talks about them (apologies for the quality) Some of them are: much better security, free purchase protection, flexibility on cash flow plus there are way more even before you get to actual perks like cashback etc.

@counterinstitute 2 года назад

Hi Sasha, is there ANY credit card that does NOT have the 30-day interest free on purchase? Or that is always the case with each and every credit card?

@SashaYanshin 2 года назад

Some have less - eg 25 or 19 but all have some.

@josephwhite9628 3 года назад

Sasha If a merchant credits my CC account after i cancel an order. Can i ask my CC provider to send the Refund, once cleared, from my CC Account to my current account? Thanks And keep up the great content

@SashaYanshin 3 года назад

You could technically but with most providers it is an incredibly painful manual process so if your card is still open, it is far far easier to just go an spend that refund on stuff you'd normally spend money on anyway if that's possible as that will involve far less hassle and save a few hours of hanging about on the phone.

@leonardestrella541 3 года назад

Hi Sasha, I remember in one of your videos but cant remember which one. You mentioned that it is possible to get an increase on your limit if you ask the cc company to transfer a balance over to another cc of an amount high than your credit limit. I think that's what you said in the video, is that correct?

@SashaYanshin 3 года назад

That was a long time ago and yes - it can happen but it does depend on the individual company's credit policy. Some will allow it if your account passes other criteria.

@leonardestrella541 3 года назад

@@SashaYanshin Sure, I just wanted to confirm before applying this method and thank you. You are killing it 5k+ subs that's wicked man

@SashaYanshin 3 года назад

Thanks! It is going far better than I ever expected! :) Glad people are finding some of it useful!

@davidthomas6043 Год назад

This is just an hypothetical query. Assume someone has a Credit Card only, with no Debit Card. Assume the credit limit is £20000, and has balance on it of £5000,due to Credit Card company, this leaves £ 15000 unused credit. If this person pays £25000 to the Credit Card company the company would have £20000 debit balance. Could the person now use the Credit Card to buy something up to value £ 40000, so using the £20000 credit facility? Or is overpaying the Credit Card not permitted?

@sidkings 3 года назад

@17:02, This happened to me when I got my a credit card with a company called Provident. I wanted the prestige of a "Platinum" card 😆. For several months after I had closed my account I kept on getting bills through demanding payment. At no point was I told why I was being charged, each time I was convinced I'd cleared my balance and ended the agreement with them. Then I realised that the departments involved were'nt talking to each other and each time it was traling interest plus late payment charge! Criminals! Mind you this was back in like 2001 when I guess the technology was'nt great.

@SashaYanshin 3 года назад

Think the big lesson here is not to ignore letters from finance companies because it can end being both costly and ugly!

@sidkings 3 года назад

@@SashaYanshin Yeah, the problem was, I was at Uni at the time. So did'nt get the letters until I arrived home, weeks later. Also they did'nt attempt to contact me by phone or email... I felt it was the companies fault. Confirming my agreement is at an end and at the same time continuing to charge me? .. I don't think you see that company around much anymore.

@SashaYanshin 3 года назад

@@sidkings They are very much around - Vanquis is their main brand :)

@stuarcari 2 года назад

Hi there. For ease say I have a statement from 1st July to 31st July and the due date is 20th Aug. I'm set up to pay full balance by DD. In July I spend £100 and that's the amount due by 20/08. Now say for example on the 10th of Aug I spend £50. Now my balance is £150. What happens on 20/08? Does it just take the £100 from July and I would pay the £50 i spent in Aug in Sept, or would it take the full £150 on 20/08 because I say I want to pay in full? I'm thinking it's the former, but just wanted to check. Hope I've explained my question clearly enough.

@SashaYanshin 2 года назад

It will take £100 on 20/08. The £50 will be due in September. 👍

@stuarcari 2 года назад

@@SashaYanshin Thanks so much for the speedy reply

@YoungMaxo18 Месяц назад

Do you only pay back monthly what you spend from your credit card balance?

@olivershiel1608 3 года назад

I’ve just tuned 18 today and I did a credit card comparison and it says I’m not eligible for any credit cards at all?

@SashaYanshin 3 года назад

Have you got any credit history at all? An overdraft on your current account? Ever had a mobile phone contract? Are you sure your address etc is formatted the same way as on credit reference files. Have you got onto the electoral roll? There are free versions of each credit reference agency online data - you can join those and take a look as a good starter!

@ZOMBIE2LIFE 2 года назад

Is there a fee for making purchases?

@SashaYanshin 2 года назад

Not in almost every case for regular purchases in the same country.

@thelevelswithbronia-financ6304 3 года назад

Awesome explanation thank you for sharing Sasha. Learnt a lot. I will definitely be back for more. Like 59 let's grow.

@thelevelswithbronia-financ6304 3 года назад

This is gold. Wooow now I understand a lot of things

@SashaYanshin 3 года назад

Thank you! I Appreciate it :)

@lindasanderson9787 3 года назад

I recommend a very good specialist Mark Lazzaro [Mark@creditpatchup.com] who helped me so much to improve my credit score and removed all negative items that I didn’t want. My score was 510 and after 13 days it was boosted to 790. I was very pleased and desire to share this with the world. I was not sure he would actually do it because I have been scammed twice. He told me all I need to do which I humbly did without hesitating in less than a week I saw the miraculous job, I couldn’t believe it. And I got a mail from credit bureau confirming the good job he did. Contact email [Mark@creditpatchup.com] Cheers.

@colinwebster6700 3 года назад

Just got accepted for an ocean credit card, my first credit card how do I build my credit score with it

@SashaYanshin 3 года назад

Nice and simple. I actually have a video where I literally go through this! ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-nzbYMqZQ4yY.html

@dhraysvlog1118 2 года назад

What happens if I don't spend on my card for that month?

@SashaYanshin 2 года назад

Nothing. Your balance will be 0 and you won't have to pay anything.

@lizardltd 2 года назад

Not sure if i understood everything, I'm currently still living with my parents and I don't buy many things, if i will keep using my credit card like a debit card, i won't borrow any money, and i won't receive any money, will i need to do/pay anything?

@BenM388 3 года назад

so I set up a direct debit for my credit card, says my minimum payment needs to reach my account by 11th feb, but the direct debit is being debited on the 11th, could I still run the risk of missing payment even with a direct debit?

@SashaYanshin 3 года назад

If your direct debit is set up, your statement will say so and yes - they always say the "has to reach by" just in case your direct debit is cancelled or bounces and you make a payment by other means. If a DD is set up, you can't miss a payment as long as there's enough money in your current account. In fact - sometimes the DD actually takes the money AFTER the deadline if there's bank holidays etc involved but it'll still count :)

@muhammadbinshafqat3450 3 года назад

how to get verified on CRA's

@SashaYanshin 3 года назад

You don't really have to do anything regarding them - your credit profile will build itself if you do the right things with credit products.

@LeeLucas Год назад

In other words, the only way to get 0% interest with a credit card is by paying what you borrow back in full at the end of the month and even then you might have to pay back some charge on top. You would be better off with 6 months interest free credit that some stores will give you or even Paypal's pay in 3. Having a credit card is like having a noose around your neck and potentially if you don't watch what you are doing with it you could be paying off the interest for the rest of your life.