Revolving credit card: installment repayment of credit

In recent years our habits are changing, we are using less and less cash and alternative payment instruments are spreading, especially electronic: ATM or debit cards, credit cards, online transfers, MAV and so-called revolving cards ; let’s see what it is!

A revolving credit card allows access to a credit line whose repayment can be paid in installments and not paid in a single payment

credit loan

Perhaps not everyone knows that all credit cards are a form of financing by the bank or financial company that delivers it to the customer: this is the substantial difference compared to ATM cards. Usually a card of this kind is linked to a current account at the same financial structure and every withdrawal or payment the customer obtains a loan from the latter, which will be returned with the recognition of a specific interest.

A traditional card requires that the amounts lent during a month must be reimbursed by the user within the end of the following month, regardless of the amount of the sums paid. Obviously, if this is very high, you may find it difficult to repay everything in one go. This is why the banks offer revolving cards .

The revolving card allows the customer to choose a maximum amount to be returned each month

loan

If the monthly amount obtained on loan is lower, only the due amount will be returned the following month. If instead the sum was higher than the maximum monthly threshold established by the contract, it will be possible to pay in installments the repayment of the surplus, spreading it on several installments. However, in exchange for this greater flexibility, the bank will require a higher remuneration: therefore, it will provide for interest rates on repayment of excess capital and probably also for higher management costs. The rate depends on the contractual conditions, but can also be around 14% – 20% per year.

It is not just traditional banks that offer this product: it is now very easy to get even an online revolving credit card , thus avoiding the loss of time and queues at the counters. Usually, this kind of offers also promotes other advantages, such as the absence of charges at the time of withdrawals, zero or reduced registration costs and free home banking services. We only need to pay attention to the details of the offers: for example, some promotions offer a revolving card in 24 hours or at reduced rates. Interesting offers, but they must be carefully examined.