The revolving cards that we never end up paying off

Be very careful with credit cards that we never pay off. They're called revolving These loans are characterized by allowing small, fixed monthly payments or a percentage of the total. The big problem is that no matter how many installments we pay, it seems the debt doesn't decrease, or even increases. Why?

The interest rate on these cards is usually around 20%. For reference, a mortgage is around 3% and a personal loan is 8%. Therefore, we are talking about the highest type of financing. Each month, the interest we must pay is calculated based on the outstanding principal. Let's imagine we have to pay 80 euros in interest and the fixed monthly payment is 50 euros. In this case, the outstanding debt will increase by 30 euros for the following month and will also accrue interest, causing the value of the debt to skyrocket over time.

In Spain, approximately €300 billion in credit card transactions are made annually. This type of card is practical when we want to split large payments or in specific cash-flow situations, but due to their high value, it's important to understand their risks. It's common to use cards for small, recurring payments (grocery store bills, gas, subscriptions), which seem insignificant, but when combined, they cause the debt to remain stable or even grow despite paying each month.

There are numerous rulings in Spain that declare the interest of cards revolving as disproportionate usury, forcing the interest rate to be recalculated and the money you overpaid to be returned. If you find yourself in this situation, don't hesitate to file a claim.