Nowadays, one of the most popular payment methods among people is credit cards. But living off a credit card alone isn’t exactly paradise. That’s because, along with the card, come the revolving interest.
Regardless of what each one’s reason is, using a credit card has become the most common option among consumers .
Basically, when you purchase your credit card, it’s a future payment. And, at the end of each month, an invoice is generated with the expenses that were made on that card.
However, there is an option to pay a partial amount of this slip, causing fees, called revolving interest, to be applied to this amount . They are the great villains in people’s budgets.
And, so you don’t fall into traps, we’ve separated some tips for you to put into practice today. You don’t have to throw your credit card away, but pay attention to everything about revolving interest.
What is Credit Card Revolving Interest?
Revolving interest is fees applied on a paid amount . This, however, is lower than the amount of the debt, meaning that there is still a debt on the part of the customer.
Revolving interest is applied on top of the remaining amount of the previous invoice, with an additional one to be paid.
Consumers often end up overspending and end up resorting to this as if it were a solution, but it is a trap. That’s because the debt amount will increase, becoming a real snowball.
The amount of interest on the revolving loan to value ratio can be high, as it is a risk that the company assumes when the customer does not make the payment on time.
At this point, the financial institution performs a credit analysis, observing various data and information about your consumer profile.
They even use the Serasa Score to find out if it is safe to lend money, that is, to grant credit to the person.
From this, the financial situation of the debtor is understood at the same time as the possibility of the same to pay its debts. From then on, a pre-approved credit limit is automatically released by the institution.
Many people still confuse revolving interest with revolving credit. However, there are some important differences to understand. Find out more about this concept below.
How does Revolving Credit work?
It is an “emergency loan” , that is, a line of credit that is automatically opened by the consumer. It can be obtained by a legal entity or an individual , with a limit already established by the financial institution.
It is similar to overdraft and is becoming a growing source of emergency income.
There are some features that make revolving credit so widely used. We can highlight:
- Use only the pre-approved credit amount, either as part of the card payment or for withdrawal.
- A prior credit analysis is carried out, subject or not to approval.
- As money is paid or used, the amount of credit may change. This means that credit can decrease or increase according to consumer action.
- The customer can only make the payment based on the amount used, which can be changed, as taxes and fees are added.
- The consumer can pay the debt in installments or in full.
- Credit can be used steadily.
But, before using the revolving credit, it is necessary to observe some important points. When you choose to make a partial payment on your credit card debt, interest and charges will be charged on top of that amount.
So, as much as the debt is not large, as this full payment takes longer to materialize, the greater the amount to be paid.
There are also two types of revolving credit: regular revolving and non-regular revolving . Learn more about each one below.
Regular rotary
When a person pays the credit card debt between the minimum amount and an intermediate amount , it enters into regular revolving.
Although the percentages may vary from creditor company, high interest rates average 13% per month.
Non-Regular Rotary
If the consumer has not made any kind of debt payment, he enters the non-regular revolving . This line of credit is also considered a type of loan. However, it has less advantages compared to others.
How to calculate Revolving Interest?
Calculating revolving interest is not as difficult as it seems. To begin with, you should know your credit card company’s interest percentage.
As values can vary, this is the first step in doing the calculation.
Generally, the fee charged is indicated on the card statement. After that, just do the math.
For example, if you have an invoice of R$ 1000.00, but you only paid R$ 700.00, you have a debt of R$ 300.00 for the next month. So in the following period, you should have an average spending of R$ 500.00.
Just add the R$ 500.00 of current expenses + R$ 300.00 of debt from the previous month + R$ 25.00 of revolving interest (this amount may vary according to each company).
In total, you will have to pay BRL 825.00. This is if the full payment is paid in the following period. If not, this amount will increase as interest is being entered.
How to get rid of revolving interest debt
Now that you better understand revolving interest, you will think twice before using it in your day to day life.
And for those who are tight on money, they have a conflict of interests: saving money or making the purchases they want.
From the moment you have some credit card debt, the revolving interest will be applied on top of the amount to be paid .
But there are some ways to not fall into this trap. And we can highlight:
- Organize your expenses better . This allows you to have a better understanding of what can be reduced as it is straining your budget. You can even check out one of our posts to learn how to organize your budget and get out of debt , which will help you a lot at this time.
- Invest in technology to manage expenses . Some credit card companies offer applications that help control expenses. Just set the limit and follow your spending through the app. That way you won’t have any surprises when paying the bill.
- Do not delay paying your credit card bill . If you get confused with deadlines, write it down in an agenda. In this case, even if it seems practical, it is not recommended to pay the invoice by direct debit. This is because there is a great chance that you are not clear on your expenses, as well as less effective management of what you receive and what you pay.
- Avoid paying everything with a credit card . While it is a great expense management tool, it should be used with care. You can read the blog article that talks about whether it is a good alternative to pay a credit card bill . This document can explain everything about it to you.
- Be careful when splitting your purchases . This can get in the way of your financial organization.
- Have expenses according to your lifestyle . Buying too much can end up causing unnecessary debt. Even if you are already having headaches with this.
- Avoid making cash withdrawals using the “credit” function . This causes withdrawals to enter revolving credit, which has the highest interest rates on the market.
- Pay the full amount of the credit card bill . This prevents revolving interest from being applied. If you don’t have money, an alternative may be to look for a personal loan. This topic is also much debated and questioned. Many people still have doubts about what it is about and end up getting confused.
All you have to do is register and we will look for an institution to provide this loan. You will have to choose between the various proposals received.
Define which credit best fits your profile and organize yourself financially. The Bom Pra Crédito online loan has the lowest rates on the market and is very easy. Contact us for more information.
How can I access the Card’s Revolving Credit?
There are two ways to access the card’s revolving credit. The first, and most common, is when the credit card bill is not paid in full .
This leads the financial institution to automatically use revolving credit, as well as apply interest rates.
The second option corresponds to withdrawing money using the “card” function .
This is a little used way, as not everyone knows that it is possible to withdraw money using your credit card.
And this, which may seem like the ideal solution to a problem, becomes a stress when paying.
Necessary precautions and dangers of revolving interest
However, there are cases where there is no way: you must pay the bill late and suffer with interest. But there are some ways you can not suffer so much from it.
And the first step is to understand for sure the dangers that surround these rotating fees.
To begin with, from the moment you are in debt, you must know exactly what the debt is.
Analyze the interest rate that the card charges, so you will be more aware of its importance.
In themselves, these fees are high, but at times there is a reduction. For example, in October 2018, on average, revolving interest rates fell compared to September , reaching 275.7% per annum. These data are disclosed by the Central Bank, which makes this regulation for the consumer.
So, a tip is that, if you have to pay late, pay as little as possible. Save more, make some choices that don’t make you spend money .
This will lower your debt spending the next month. After all, revolving interest is applied on top of the amount to be paid.
Those are the lowest rates. So it pays to do some research before getting a credit card . Nowadays there are many options, allowing you to have more freedom of choice.
Revolving Interest versus Overdraft
There is still a point that many people still confuse: between revolving interest or overdraft, which one to choose?
Overdraft is a type of loan offered by financial institutions. What differs the revolving interest from the overdraft is the rate.
Also according to the Central Bank, in 2018, the interest rate on the overdraft was 300.8% per year.
Compared to the 275.7% per year of revolving interest, the overdraft is not as advantageous.
Five Tips to Avoid Falling into Revolving Credit
There are some tips that can help you not fall into revolving credit. These are practical actions that you should do frequently.
Pay the full amount of your credit card bill
The first step is not to leave debts from the previous invoice . Pay in full, thus preventing revolving credit from being applied.
To do this, monitor your monthly expenses, as well as manage your cash inflows and outflows. This is important for you not to have any debt.
Don’t delay paying your card bills
This is another important point. Make payments on time . If you can’t save dates easily, get organized.
Use agendas or apps to manage this. Also, if you don’t have a fixed income, your attention should be redoubled. Change payment dates in a way that doesn’t jeopardize your organization.
If you have more than one card, use strategic dates so you don’t get in the way. And, if you are self-employed, avoid mixing company accounts with your personal expenses . That’s another step to messing up your financial organization.
If you are “on the revolving card” consider a personal loan
If you are already suffering from revolving interest, review the options available to facilitate the payment of this debt .
A widely used option is to apply for a personal loan. Because it is an alternative with lower interest rates than the revolving one, it is widely practiced.
But for that, you must organize yourself financially, after all, if you don’t have this planning, you can exchange one headache for another.
This can be done anywhere and anytime, as it is an online personal loan . Just fill in the registration on the site, with the main information.
Meanwhile, Bom Pra Crédito seeks loans from several other financial institutions. From there, you will have several proposals available to choose from. Compare each one and choose according to your profile. Complete everything on the website or through our partner stores. See now our special conditions.
Avoid withdrawals using the credit function
Avoid withdrawing money from the credit function . If necessary, borrow from someone you know or look for another way to get that money.
If you have a high amount, consider a personal loan. But don’t withdraw that money from your credit card. because it will enter the rotary.
Look for the best credit card options
There are several credit card options. Search each one not only for the low interest rates, but also for other advantages present in this service.
You can even make a credit card at Bom Pra Crédito. There are several advantages and you can purchase quickly, from anywhere in Brazil.
Conclusion
Credit card is not a villain in your life, but an opportunity for you to manage your expenses more effectively.
But be responsible and organized. Avoid delaying your payments or withdrawing money from your card. This , if done without planning, can snowball your finances.
If, even after all your care not to acquire debts, they still persist, contact Bom Pra Crédito.
Be sure to do an online personal loan simulation . Together, we can find the best way to resolve your situation. Visit our website and check it out right now!
