Much is said about changes in credit card revolving, but what has really changed? In fact, the major cause of default in the country comes from credit cards.
People can’t pay the full bill and then debts start. And the government, in an attempt to stem this problem, has proposed new rules for credit card payment, but not all consumers are aware. We’ll tell you what it is, how it works and more. It’s a way to help you not turn your debt into a snowball.
What is revolving credit card?
Credit card revolving is when you pay an amount between the minimum and the total invoice, that is, the credit taken by the consumer when you pay less than the total invoice amount.
What you do not pay turns into a loan, with the incidence of interest. When a customer is unable to pay the bill, he or she may be denied the name of the credit protection agencies. The problem is the consequences from there: you can’t make a loan, apply for a loan and let alone use the card. Until April 2017, minimum card payment was allowed for several months. Except it was interest over interest. And remembering that credit card interest is exorbitant. Just to give you an idea, the rates charged by major banks range from 168.8% to 297.46% per year.
How does credit card revolving work?
With the new credit card revolving rule, the customer can only make a minimum payment of 15% of the card for just one month.
In the next invoice, the remaining balance, the bank may not charge interest on that balance. Either you have to pay off the total debt or the bank has to present you with another line of credit with the lower interest rates. This was a way for the consumer not to accumulate the debt, so that it becomes priceless. Returning to the line of credit that the bank has to guarantee: it is possible to repay your debt, but the interest charged to be lower than that of the credit card.
Tips for using credit card
Of course, no one intends to default because of the revolving credit card. Therefore, we have separated some tips for the correct use of the card:
- Always try to pay the full invoice;
- Avoid installments;
- Do not buy on impulse;
- Just buy what you’re sure you can afford.
In fact, the credit card can be both an ally, but also your enemy. As already said, the biggest cause of default in the country is the credit card. Interest is abusive and so you don’t have this kind of problem, just follow our tips.
If you know how to use the card responsibly and conscientiously, it is obviously very helpful, especially when you do not have money at that time. It is very normal for consumers to look at the card limit and think it is money they have. The value is a loan the customer is taking and the worst, with very high interest.
Is it worth having a credit card?
As mentioned above, if a person knows how to use the card with intelligence and wisdom, it is of course worth it, especially in emergency times.What you need to always keep in mind is that whatever you spend will come on the next bill. Therefore, you should only buy what you can afford. Otherwise, if you make impulse purchases and take advantage of all promotions, it is preferable to leave your card at home.
Another problem we see a lot is people with multiple credit cards, each with an expiration date. This is a danger! Ever wondered when the bill for all of them arrived? If you find it essential to have a credit card, just have one. And this is where good financial planning comes in, where you know how much you can spend and plan for payment.
Installment is not the best option
You who were in doubt of what it was and how the credit card revolving works now have all the information.
If for some reason you are unable to pay the full invoice in a particular month, be aware that the next invoice will have to pay the entire invoice or install the remainder. It is no longer possible to make the minimum payment for several consecutive months. This measure is very interesting because it prevents your debt from becoming unpayable and not being dirty-named.