Re: maybe im stupid..but...

Posted by mk_378 (164.106.129.132) on June 11, 2004 at 21:11:30:

In Reply to: maybe im stupid..but... posted by catballou on June 11, 2004 at 14:46:13:

Cat, he was going to overpay AMEX, creating a credit balance so he could charge something that costs more than the credit limit. The credit limit (should be called the debt limit, but companies are understandably wary of that word) is the largest "normal" balance they'll let the consumer have. If you overpay, it's a credit balance; the bank owes the consumer money instead of the other way around. So now he can make a large charge and that money will be spent first, only the excess over the credit balance will go against the credit limit.

This is an AMEX charge card, there's never any interest on those but the full balance has to be paid back with every bill. AMEX will let you use their money for free for up to a month. On the other hand, if you keep a credit balance on there, the bank won't pay back any interest either.

A credit or charge card is a fast and convenient (perhaps too convenient) way to transfer money to a merchant. Also it gives the consumer some rights to take back the payment if the merchant doesn't hold up their end of the deal.

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