We use our credit cards for making purchases, for withdrawing cash and for making fund transfers.  Credit card has simplified the way we used to conduct our purchase transactions.

A credit card can be used for making small or large payments depending on the credit limit set by the credit card provider. This limit is decided by the provider at the time of issuing the credit card.

Credit card holder has to keep in mind that all payments made by using the credit card in a particular month cannot exceed the credit card limit. As soon as the credit limit is reached, credit card holder will not be able to use it for making any further purchases till the time he/she pays a certain amount of money towards the balance due on his/her credit card.

Meaning Of Revolving Credit Card

Almost every credit card comes with a revolving facility. At the end of every month, credit card holder is required to clear the dues on his/her credit card. For Instance, a credit card holder has a limit of $ 15,000 on his credit card.

He uses this credit card for making a payment of $ 15,000 in the month of June 2011. At the end of the month, he will be required to pay $ 15,000 in full to avail the benefit of 100% credit limit.

However,credit card companies generally provide a facility whereby the credit card holder can make a minimum payment in order to reset his/her credit limit available on the credit card.

Here, the credit card holder will make the minimum payment (generally specified in the credit card statement) and will carry the remaining balance to be paid in subsequent months.

For Instance, in the above case, the individual may decide to make the minimum payment of $ 2,000 instead of total amount due ($ 15,000). As a result $ 13,000 will remain outstanding at the end of the month which will be carried forward.

When To Avail Revolving Credit Card Facility?

Even though revolving credit facility may seem to be very attractive, this facility should be used only when you need to make some urgent payments or purchases and you don’t have enough cash to settle the balance due on your credit card at the end of the month.

This is because; heavy interest charges are levied by the credit card companies on the balance that remains outstanding at the end of the each month. By making the minimum payment due on credit card, an individual can reduce the possibility of a situation of credit card default which may arise on account of non payment of credit card dues.

Many credit card holders are tempted to use this facility without understanding the associated consequences. It is important for them to understand that financial charges levied on any balance that is carried forward will have to be paid by them in the near future.

In case revolving facility is availed by the credit card holder, he/she should make every possible effort to pay all the credit card dues as early as possible.

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