What is a revolving credit card

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A revolving credit balance begins with your credit limit. If you have a $5,000 limit and you don’t charge anything or use any of the money, you have a zero balance. If you do use the account, interest typically isn’t charged if you pay your entire balance -- everything you’ve borrowed -- within the monthly billing period. You can take $5,000 again the next month if you want to. But if you charge $1,000 and make only a minimum payment, you now have about $4,000 in credit. Some portion of your payment will go toward interest, but if you don't have an interest-only account, some will go toward your balance as well. You'll free up that much of your credit limit so you can use it again. This cycle is “revolving,” because your balance may go up or down in any given month depending

on the amount of your payments and how much you’ve charged.


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Source: ehow.com

Category: Credit

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