So you got a credit card, somewhat good news. The problem is that first card is maxed out, very bad news indeed. As unsound the idea was, you decided to get a second card, hoping you don’t screw up like you did last time. In a twist of fate that only Murphy could provide, you just happen to max out that card yet again. Somehow, you managed to get a third credit card, really hoping to do something about the other two credit cards. A credit card is an example of revolving credit; there is no fixed amount of money that is available.
Another term for this is open-credit, because the loan is an on going amount. While there is a credit limit, like 1,5000 dollars, the actual amount available will depend on your actions. Once you pay off the charges on your card, the more credit that you will be allowed to use. This will continue over the entire lifespan of the credit card; so it could be months or it could be years. If you pay on time, there will not be interest applied to the card. The payment can be in small parts or an entire lump sum. But, if you do not pay off the balances or some part of the card, it is called “revolving debt.”
This revolving debt will continue until you pay off the balance. In a survey done in June of 2007, the United States had approximately $900 billion in revolving debt; this is not a very good thing for a country to have. In that same survey, there is an average revolving debt of $9,000 and one out of six families just make the bare minimum payments needed to not get harassed by the credit card companies. Not to mention, there is a lot of fees and interest applied to the credit card fees that will make the debt harder to pay off. If you happen to do this on one credit card, it is still very bad for the credit report, but it can be managed if you just put the credit card on ice and make useful spending only with cash.
However, if you managed to do that with two or more cards, this is where finding other sources of credit pretty hard and maybe not able to get more credit cards in the future. While there is some good with the revolving credit, but the disadvantages that will outweigh any benefits provided by revolving credit.
