The revolving credit card can easily lead the consumer to lose control: a dinner here, a shopping there, and when the bill arrives, it’s a scare. Would ethics forever change our relationship with money? There is no denying that, when used well, the credit card makes life easy, practical and safe.
To escape default, many people end up opting for revolving credit and paying only somewhere between the minimum amount and the total bill. Want to better understand how it works and how to calculate the revolving credit card? Continue reading!
How does the credit card rotary work?
Each month, you receive the invoice with all the detailed expenses and the full amount to be paid. When there is not enough money to settle everything, you can pay the minimum amount at least 15% of the total – up to an amount below the full invoice figure.
Make no mistake, though: Despite the immediate relief, getting into revolving credit is a classic example of card misuse and can make your debt priceless. . In the following month, the operator or bank will recover the outstanding amount, plus interest, fine and default.
And we are not talking about any extra! To give you an idea, the revolving credit card interest rate reached 486.8% at the beginning of this year. The percentage is among the highest in the market, next to overdraft.
How to calculate the rotary of the card?
With a simple example, it is clear how badly the use of rotary credit can be detrimental to your finances. Before you opt for the minimum invoice payment, try to calculate the impact of this choice on your budget. Watch:
1. The invoice arrives with the amount of $ 900 and the minimum payment is 20% (ie, $ 180);
2. Automatically, you put $ 720 in revolving credit;
3. In the next month, this amount will jump to $ 864 plus interest of fine and late payment.
What are the losses of not paying the full bill?
Just do the math to see that getting into the revolving credit card is from a good deal. The chances of seeing a debt become priceless are great. Therefore, opting for the minimum payment of the invoice should be your last option.
If you find that you cannot pay off your 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 under dispute, you cannot be considered in default.
However, to avoid all this headache, the ideal one is to keep finances in order and consciously use credit cards. Remember: the limit is not part of your income.
What are the new rules for using the rotary?
From April 2017, the use of the rotary credit card will have new rules. The consumer can use the revolving credit for only 30 days. The following month, either you pay off the entire invoice or the bank / operator will submit a proposal to refinance the outstanding balance.
The consumer should 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 to the installment.
Under the current model, there is no set deadline for repayment and it is possible to use the revolving machine indefinitely, which can result in a mountain of interest to pay.
Now that you know how your credit card rotary works, see how to choose the most appropriate card for your profile and keep learning how to have a healthier financial life!