The credit card revolving can easily lead the consumer to lose control: a dinner here, a shop there and, when the bill arrives, the scare is certain. Who knew that a little piece of plastic would forever change our relationship with money? It cannot be denied that, when properly used, the credit card makes life easier, it is practical and safe. To escape default, many people end up opting for revolving credit and paying only between the minimum amount and the total bill. Want to better understand how it works and how to calculate the credit card revolving?
How does credit card revolving work?
Each month, you receive the invoice with all detailed expenses and the total amount to be paid. When there is not enough money to settle everything, there is the possibility of paying the minimum amount, at least 15% of the total – up to an amount below the full amount of the invoice. However, make no mistake: despite immediate relief, entering revolving credit is a classic example of card misuse and can make your debt unpayable. In the following month, the operator or bank will charge the amount that was left open, plus interest, fine and late payment. And we are not talking about any addition! To give you an idea, the interest rate on the revolving credit card reached 486.8% earlier this year. The percentage is among the highest in the market, along with interest on overdraft.
How to calculate the card spinning?
With a simple example, it is clear how damaging the use of revolving credit can be to your finances. Before opting for the minimum invoice payment, try to calculate the impact of that choice on your budget. Please note:
- The invoice arrives with the amount of $ 900 and the minimum payment is 20% (that is, $ 180);
- Automatically, you put $ 720 in the revolving credit;
- In the next month, this amount will jump to $ 864 plus fine and late payment interest.
What are the losses of not paying the full invoice?
Just do the math to see that entering the revolving credit card is far from a good deal. The chances of seeing a debt become unpayable are great. Therefore, choosing the minimum payment of the invoice should be your last option. If you see that it will not be possible to pay the card bill, look for other forms of financing. A loan may offer lower interest rates. Another more radical possibility is to seek justice to negotiate the debt. While the lawsuit is being discussed, you cannot be considered in default. However, to avoid all this headache, the ideal is to keep your finances in order and use your credit card consciously. Remember: the limit is not part of your income.
What are the new rules for the use of the rotary?
From April 2017, the use of credit card revolving will have new rules. The consumer can use the revolving credit for only 30 days. In the following month, either you pay the entire invoice or the bank / operator will present a proposal to refinance the outstanding balance. The consumer must pay attention to the rules of the new system because it will be possible to have several installments running in parallel. Ultimately, this practice can replicate the misuse of the rotary for the installments. Now that you know how credit card revolving works, see how to choose the most appropriate card for your profile and keep learning how to have a healthier financial life! Within the current model, there is no set deadline for settlement and it is possible to use the revolving loan indefinitely, which can result in a mountain of interest payable.