Revolver or Transactor

A revolver or a transactor is what credit bureaus are now using to refer to their customers. If you are a revolver, you tend to make charges on your credit card and do not pay the entire balance off on the due date. You keep carrying a balance each month. In essence, you revolve your balance. A transactor on the other hand, makes charges on their credit cards and pay the entire balance off on or before the due date.

Credit card companies win when you are a revolver because they get to collect interest on the unpaid balances and on any new charges you make. For example, let’s say you charged $200 last month and only paid $50 on the due date. Then, this month you charge $75. The credit card company gets to charge you interest on the $150 and on the $75 because you have a balance from the previous month. You are the loser when you are a revolver. Being a revolver, will now cause you to have a lower FICO score. This can cause your car insurance premiums to go up; your interest rates on credit purchases will be higher; you could have to pay higher deposits for apartment or home rentals because of lower credit scores.

When you are a transactor, you are not giving the credit card company a chance to charge you interest on the amounts you have charged because you pay everything off each month. Learn to become a transactor instead of a revolver. Even though, credit card companies make money on revolvers, lenders prefer transactors because it shows them you are responsible with money. Your credit score will be higher when you’re a transactor.

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