What is revolving credit card and what do you do to avoid it?
revolving credit card
Everyone who has never messed with a revolving credit card throws the first stone. If you throw a pebble, congratulations! But it’s very common for mere mortals to get involved with the damn credit card.
Even the most ordinary person knows the popularity of credit card interest, which is among the saltiest creatures on the market. And the worst part is that he is one of the main offenders in financial affairs.
According To the National Survey of Consumer Indebtedness and Default, claimed66.5%Of the families owed debts in May 2020. Of these, it was alleged76.7%The credit card is most responsible for this.
This means that you need to be very careful and, above all, use your credit card responsibly. We even understand that the experience is great when you come face to face with the object of desire.
At the time of purchase, sheer joy. Really, being able to buy on credit and pay within 30 or 40 days is a nice feature. The point is, the card can be an ally, as long as you know how to use it. Shall we talk more about this?
Are you ready to better understand how a revolving credit card works and how to start using “plastic money” more consciously?
come with us!
What is a revolving credit card?
A recurring credit card is the interest charged when you can’t afford the full amount of a bill by the due date.
There is a possibility to make a minimum payment so that your name is not in default, which is equivalent to 15% of the total, but the remainder of the amount is transferred to the revolving credit.
This minimum payment includes, in addition to 15% of the total purchases on the current invoice, 100% of the outstanding balance for previous invoices, plus the full amount of interest and arrears, late fees, and installments for invoice installment agreements. Previous.
So, let’s say you have a $100 bill and you pay $15 just to avoid default. An unpaid $85 goes into the recurring bill and the next bill will be subject to interest, not to mention you still have to pay the new bill amount, hence the snowball.
The danger of this rate is that it increases with each bill and, in extreme cases, can lead a person to worse problems, such as an inability to handle emerging debts.
To get an idea of the scale of the problem, average the interest rate on revolving credit cards for individuals was more than 300% annually in January 2021, According to the central bank.
This rate changes every month and is always announced by the central bank.
New rules for new cards
Since 2017, it has become possible to Use revolving credit once a month Just. That is, today no one is allowed to spend more than 30 days using revolving credit.
After this period, banking institutions are obliged to contact the client offering options at more advantageous rates, such as bill installments.
Is it better to pay the card minimum or pay the bill in installments?
As mentioned above, if you are unable to pay the full amount of the credit card bill, the best is to pay the amount on credit premiums in in order not to fall into the renewal, because interest rates are lower.
5 tips to make your credit card an ally and not go into a spin
enjoy cardcreditWith a number of advantages, what is important is to use it responsibly and maintain control of your money.
For this, you should pay attention to some points.
1. Get in the habit of organizing your money
The first step to having more control over your credit card is to get your finances in order.
You must be clear about what your monthly income is, what all your expenses are changing And firmware, and what excess expenses all need to be cut down so you can lay Limit high card expenses permanently.
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To do this, you can use an Expense spreadsheet And start tracking every penny that comes out of your account, especially credit card expenses.
2. Pay attention to the perfect date to buy
The bank indicates an ideal date for shopping. When planning to buy that day, you will have up to 40 days To pay and, if applicable, add the invoice amount.
3. Be careful when choosing an expiration date
The due date should be close to the day your salary or payment for work, in the case of a freelancer, enters the account. Thus, you honor the commitment, without compromising the budget.
4. Use your points and frequent flyer programs
Learn about the programs offered by the financial institution. You can convert your score into airline tickets, tour packages, get discounts in stores, movie and show tickets, products, and returns Cell phone charging, for example.
You can also choose to get discounts on the bill amount or on the card’s annual fee if your card covers it. It’s a matter of talking to the manager and choosing the best benefits for your situation.
5. Have a no-fee credit card
Did you know that some credit cards have no annual fees, monthly fees, or fees? That is, you only pay for what you actually use and don’t have to worry about arbitrary interest.
Have you seen how you can benefit from your credit card? However, if you still get into vertigo, spend as little time as possible in it.
In any case, remember that there is always the possibility of paying the bill in installments and paying lower interest rates.