Questa è una versione PDF del contenuto. Per la versione completa e aggiornata, visita:
https://blog.tuttosemplice.com/en/revolving-credit-cards-guide-to-risks-and-benefits/
Verrai reindirizzato automaticamente...
The revolving credit card is an increasingly common financial tool in Italy and Europe, appreciated for its flexibility. Unlike a traditional pay-in-full credit card, which requires the repayment of the entire amount spent in a single solution at the end of the month, the revolving card allows you to pay in installments. This makes it similar to an always-available line of credit: every time a purchase is made, a part of the credit limit granted by the bank is used, and with each repaid installment, the credit is replenished, ready to be used again. This “rotating” characteristic offers considerable room for maneuver in managing daily and unexpected expenses.
However, this convenience comes at a cost. The ability to defer payments involves the application of interest on the amounts used and not yet returned. It is therefore fundamental to fully understand the mechanism of this tool, carefully evaluating not only the immediate advantages but also the long-term risks, such as that of over-indebtedness. Conscious use, based on a clear understanding of the contractual conditions, is the key to transforming the revolving card into an ally for your finances, rather than a potential trap.
The operation of the revolving credit card is based on a simple concept: a pre-approved line of credit, called a credit limit or ceiling, which the holder can use for purchases and withdrawals. Every expense made reduces the available amount, while monthly repayments restore it, making it accessible again. This continuous cycle is what defines “revolving” credit. The amount of the credit limit is established by the issuing institution after assessing the applicant’s creditworthiness, considering factors such as a stable income and residence in Italy.
Debt repayment takes place via monthly installments, the amount of which can be fixed or variable (a percentage of the balance due). This flexibility allows you to adapt payments to your current economic capabilities. However, each installment is made up of two parts: a principal portion, which effectively reduces the debt, and an interest portion, which represents the cost of financing. It is crucial to carefully read the contract’s information documents to understand the interest rates applied, expressed as TAN (Nominal Annual Rate) and TAEG (Annual Percentage Rate of Charge – APR), which includes all ancillary costs.
The main advantage of the revolving card lies in its extraordinary flexibility. It offers immediate liquidity to manage unexpected expenses or major purchases without having to request a personal loan every time. Imagine having to replace a broken appliance or book a last-minute trip: the revolving card acts as a cash buffer always ready for use, faster and less bureaucratic than traditional financing. Once obtained, the credit limit is continuously available, recharging with repayments and eliminating the need for new inquiries for every need.
Another positive aspect is the personalized management of repayments. Many cards allow you to choose the monthly installment amount (within a set minimum) or decide whether to repay in fixed or variable installments. Some cards, defined as “option” cards, even allow you to choose from time to time whether to pay in full or pay in installments for a specific expense, offering maximum control. This modularity allows you to plan outflows based on your monthly budget, making expenses more sustainable. Furthermore, if not used, the credit line generates no costs, functioning as a zero-cost emergency reserve.
Despite its apparent convenience, the revolving card hides significant pitfalls, first and foremost the risk of over-indebtedness. The ease with which credit can be accessed can lead to unwise use, leading to the accumulation of substantial debt without realizing it. The installment repayment mechanism, if not managed carefully, can turn into a spiral: minimum installments often barely cover the interest, leaving the principal almost intact and indefinitely prolonging the debt extinction times. The Bank of Italy has repeatedly drawn attention to the need for transparency on the part of issuers to mitigate this danger.
Another concrete risk is linked to high costs. The interest rates (TAN and TAEG) of revolving cards are generally much higher than those of traditional personal loans. According to estimates by the Bank of Italy, the average rate can reach double-digit percentages, making this form of credit one of the most expensive on the market. Added to these are often ancillary costs such as annual fees, management fees, and commissions for sending the account statement, which further increase the total cost of financing. It is therefore fundamental to analyze the TAEG (APR), which offers a complete view of how much you will end up paying.
In the Italian financial landscape, historically oriented towards savings and the use of cash, the adoption of credit instruments like the revolving card represents an interesting meeting point between tradition and innovation. Mediterranean culture, and specifically Italian culture, has always shown a certain caution towards indebtedness, favoring liquidity or at most the classic mortgage for purchasing a home. However, the demands of modern life, characterized by online purchases and the need for flexible payments, have pushed more and more people to explore new solutions.
The revolving card fits into this scenario as an innovation that responds to the need for flexibility, while clashing with a traditionally prudent mentality. If on the one hand it offers a modern response to expense management, on the other it requires a cultural shift towards greater financial education. The challenge for the Italian consumer is to integrate this innovative tool without falling into the traps of easy debt, balancing the convenience of “pay later” with the traditional wisdom of “don’t spend more than you have”. The growing attention of authorities, such as the Bank of Italy, on transparency and customer protection, supports this transition.
The choice of the most suitable financial instrument depends strictly on your needs and spending habits. The pay-in-full credit card is ideal for those who want the convenience of electronic payments and are certain they can cover the entire amount spent at the end of the month, thus avoiding any interest. It is a practical solution for ordinary financial management, but it does not offer flexibility in the event of unexpected expenses that exceed monthly liquidity.
On the other hand, the revolving card is designed for those who need to defer payments, offering a liquidity reserve for major purchases or emergencies. However, its high interest rates make it less convenient than a personal loan for financing large-scale or long-term projects. A loan, in fact, generally has lower rates and a defined amortization schedule, but requires a more complex inquiry process. The conscious choice lies in evaluating the amount to be financed, your repayment capacity, and the time horizon, opting for the solution with the best balance between flexibility and cost. Comparing different options, such as a credit, debit, or prepaid card, is the first step to an informed decision.
The revolving credit card presents itself as a double-edged sword. On one hand, it offers considerable flexibility and immediate liquidity, proving to be a valid support for facing unexpected expenses or deferring important purchases without having to resort to complex procedures. The ability to replenish the credit limit with repayments makes it an always-accessible money reserve. On the other hand, the high costs and the concrete risk of over-indebtedness represent a danger not to be underestimated. Interest rates higher than those of other forms of credit can transform a small debt into a financial burden that is difficult to extinguish.
In conclusion, there is no single answer regarding its convenience. The key is conscious and responsible use. Before requesting it, it is essential to read the contract carefully, fully understand the difference between TAN and TAEG, and evaluate your real repayment capacity. The revolving card can be a precious ally if used with discipline, for specific needs limited in time. In case of need for liquidity for larger projects, a personal loan often remains the wisest and most economical choice. The final decision must be based on a careful analysis of your finances and a clear understanding of the conditions offered, to exploit the advantages while minimizing the risks. If you are concerned about security, you might want to know how to disable contactless for greater protection.
The fundamental difference lies in how you repay your expenses. With a normal credit card, known as «pay-in-full», you must return the entire amount spent by the middle of the following month, without interest. Instead, a revolving card allows you to pay in installments. It works like a line of credit: the bank grants you a credit limit that you can use for your purchases and that you repay with monthly installments, while paying interest on the amount used.
Yes, the costs of a revolving card can be significant. The main cost is given by the interest, measured by the TAN (Nominal Annual Rate) and especially by the TAEG (Annual Percentage Rate of Charge), which includes all expenses. Interest rates are generally higher compared to other types of financing and the TAEG can easily exceed 20%. It is fundamental to read the contract carefully to understand all costs and avoid surprises.
The revolving card is useful for managing unexpected expenses or for purchasing durable goods (like an appliance) when you do not have immediate liquidity. It offers great flexibility, allowing you to pay a significant cost in installments. However, it is not recommended to use it for everyday expenses, like grocery shopping, because you would end up paying interest on every small purchase, accumulating a debt that is difficult to manage.
Failure to pay, even just one installment, has serious consequences. The financial institution will apply default interest, increasing your debt. Furthermore, it will proceed with reporting to the CRIF (Financial Risk Central) or other credit information systems. This report as a «bad payer» will make it very difficult to obtain other loans or financing in the future. In the most serious cases, the financial company can initiate legal action for debt recovery.
Yes, it is possible to extinguish the debt of a revolving card at any time. In fact, it is a recommended choice to save on future interest. To do this, you must contact the company that issued the card to know the exact amount of the residual debt and then make a single payment to settle the entire figure. In this way, the line of credit is closed and no further costs will accrue.