Identification

• Revolving credit differs from traditional credit. With the latter, you borrow a fixed amount of money and typically repay it by making fixed payments until the debt is retired. With revolving credit, which is commonly found with most types of credit cards, you can borrow up to a predetermined credit line. You repay your obligation by making at least a minimum monthly payment that is usually calculated as a percentage of your outstanding balance. In the credit card industry, paying a minimum of 2 to 3 percent of your balance each month is normally required.
  
  

Flexibility

• Revolving balance credit cards offer you a great deal of financial flexibility. Instead of paying for a large purchase in full upfront, you have the option of paying off the balance over time as your finances allow. The only requirement is that you pay at least the minimum amount due each month. This payment flexibility also allows you to purchase items that you otherwise could not afford. If you experience a financial emergency, a revolving credit card can provide you with the funds you need to cover it while postponing repayment.
  
  

Business Benefits

• If you're a small business owner or self-employed individual, a revolving balance credit card can help provide financial stability during times when revenues are limited. You can use the card to cover expenses until business picks up again, or to keep you afloat during the early stages of your enterprise. When your revenue stream increases, you can use some of the money to pay as much or as little of your balance as you deem necessary.
  
  

Danger

• The danger of revolving credit cards is that you may be tempted to pay only the minimum amount due each month, which increases the time it will take to pay off the balance. Because the minimum amount is calculated as a percentage of the total balance, the minimum will also increase as your balance increases. Many revolving credit cards feature high interest rates, sometimes as high as 15 or even 20 percent, which can make your outstanding balance even more difficult to pay down.