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During the pandemic, Brazilians had a hard time keeping up with their bills, including their credit card bills. The result? The demand for revolving credit card interest in 2021 is the highest in 10 years.
Not paying your credit card bill can snowball your debt and land you in revolving credit.
The big problem is that this emergency limit has the highest interest rate on the market, reaching up to 343.55% per year.
As a result, users end up not being able to pay the revolving credit either.
Speaking of which, be sure to read our article “How to get out of credit card revolving interest”.
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In today's text you will discover How does credit card revolving payment work? and other details about this service. Don't miss it!
See below what you will find in this post:
- What is revolving interest?
- What precautions should I take to avoid falling into revolving interest?
- How much is the interest on revolving credit?
- Is it better to pay the minimum or pay the bill in installments?
- How does credit card revolving payment work?
- Conclusion.
What is revolving interest?
Revolving interest is the rate charged on the revolving credit, a type of credit card interest.
When the customer does not pay the credit card bill by the due date, he can choose to pay in installments.
Then, he makes the payment of the minimum amount and the rest will be financed by revolving credit. Therefore, the interest on the revolving credit is only the interest on revolving credit. This interest is charged on the amount that the customer was unable to pay.
Before 2017, the user could pay the minimum amount of the bill for several months in a row, however, he was at the mercy of the revolving interest, as he was unable to get rid of the debt.
In 2017 a law was created, the new rule was created so that the debt does not accumulate or/and becomes larger.
With the new rule, the card user can only pay 15% of the minimum invoice amount for a month. In this case, the bank can no longer roll over the debt on the next invoice.
This gives the customer two options: pay the full amount or divide the debt into another line of credit with lower interest rates.
According to the data from Bacen, in 2021 the revolving interest reached 350% per year, which is frightening.
Revolving credit is a type of emergency credit, so it is only requested in emergencies, when the person no longer has anywhere else to turn or how to avoid it, unfortunately.
Therefore, it is essential that there are measures to prevent, that is, not to fall into the revolving interest.
The best or main way to prevent this from happening is to have total control over your expenses and financial planning.
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What precautions should I take to avoid falling into revolving interest?
Care must be taken for prevention, in fact, everyone knows about these precautions, as financial experts are always warning about it.
However, even with the warnings, people end up paying revolving interest. We do not judge, on the contrary, we advise!
Do your best to control your spending and have an organized financial life. Furthermore, do not use up your card's entire limit.
It is important to always keep an eye on and know the revolving interest rate charged by your bank.
If you happen to conclude that you will not be able to avoid this interest, try to negotiate the debt in installments that fit your budget.
Before finding out how does credit card revolving payment work, see below for more details on the interest percentage.
How much is the interest on revolving credit?
The value of the revolving credit is calculated according to its interest rate, which is one of the most expensive on the market.
The percentage varies depending on the bank or financial institution, so it is important to check the percentage on your card before making a purchase.
You can check an updated table on the website Central Bank, some rates reach 20,98%, annually the percentage reaches 883, 47%.
So, as my grandmother used to say, “You guys, be careful!” You can never be too careful to avoid ending up in the revolving credit.
Is it better to pay the minimum amount on your card or pay in installments?
Of course, the ideal is to pay the full amount of the invoice. However, unforeseen events do happen, the best option in this case is to pay in installments instead of paying the minimum amount.
By paying the minimum amount, you end up entering into revolving credit, therefore, interest ends up being charged according to the remaining amount on the invoice, that is, what was missing from the month's invoice and the following one.
The interest on revolving credit is high, so the ideal is to pay the bill in installments using a method with lower interest.
Also read: “How to pay a bill with a credit card without risk”
Even if you choose to pay the minimum amount, you can only do so in the first month, after which the remaining amount will be paid in installments at a lower interest rate, as explained in the first topic.
How does credit card revolving payment work?
Well, the credit card revolving payment is the minimum amount you can pay on your bill to avoid being in debt to the bank.
For example, the amount of your closed invoice is R$1,500.00, but the minimum payment is R$47.00, that is, you can pay any amount from R$47.00, never less.
Before, you could keep doing this until you got rid of the debt, but the interest on the revolving credit was and still is high, so instead of getting rid of the debt, it increased or prolonged.
Therefore, the Central Bank decided to create a resolution, you can only pay the minimum amount in the first month after the invoice is due, after which the invoice will be divided into installments with lower interest rates.
Did you understand How does credit card revolving payment work?? I hope so!
Conclusion
THE revolving credit is a dangerous emergency limit and should be avoided as much as possible. So be careful!
Keep your financial life organized and control your credit card spending too.
Now that you know How does credit card revolving payment work?, check out our reading recommendation below!
What is revolving credit? Check out 5 tips to avoid falling into this trap!
