Originally Posted by
Mormolyce
I work in the credit card industry. If used responsibly, you can clear off your debts quickly and pay little or no money on them. If you're smart you can even MAKE money from a credit card, with all the deals that are currently available.
But the temptation is always there to spend like crazy and only pay the minimum back - this is where the credit card company makes money.
Basically, to buy a $2500 computer you will need a credit card with a limit >= $2500. The credit card company usually assesses you when you apply to see how big a limit they'll give you (they estimate your income and expenses to decide how much you can afford to pay back, basically - and also check your credit score to make sure you aren't a deadbeat with a history of not paying bills).
So say you get a $3000 limit - you buy the computer and now your credit card balance (ie what you owe) is $2500. Every month you are charged interest - 20%/12 = ~1.7% of what's still owing. This is just added to your balance, so after a month you'll owe $2542. You can choose to pay off as much of that outstanding balance as you like, obviously the more you pay the less you owe and the less interest you'll be charged next month.
Most credit card companies require you to make at least a minimum payment - not sure what it's like in the US but I think here it's 2-5% of the principal (so like $125 in this case maybe). This is to ensure you are making some effort to pay it off and not digging a deeper and deeper hole for yourself. If you only pay the minimum it'll take a very long time to pay off so it's in your interests to pay more if you can.
One other thing is that a lot of cards offer an interest free period - so like the first month you won't be charged interest. This is great if you need short term money - you can put everything on your card that month and pay it all off in one payment at the end and be charged nothing (other than the annual fee for the card, which some cards have). Some cards even have rewards points - so you get frequent flyer miles or whatever for every dollar you spend on the card. These cards usually have bigger annual fees to compensate, but can be worth it depending how much you spend.