How Does Revolving Balance Affect Your Credit Card

How Does Revolving Balance Affect Your Credit Card

The main cost of carrying a balance forward comes in the form of interest charges. Since a credit card is one of the expensive forms of borrowing in the market, constantly revolving the balance is not recommended. It will cost you too much additional in the form of interest. Interest rate is also called as finances charges or charges on revolving credit.
Finance charges are applicable on:
The outstanding balance carried forward after payment of the minimum amount due New acquisitions will also entice finance charges from the first day Also, the interest charges are compounded daily on credit cards, as a result making it even worse. At the end of each day, the interest will be calculated on the amount that stands outstanding as per your statement. For calculating the interest for the next day, the interest charged beforehand will also be added to the outstanding balance and it goes on like this.
Though primarily, the amount would be insignificant, it has the potential of mounting expressively if you do not pay on time, thus making you fall into a debt spiral.

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