WHAT IS 'Nonrevolver'

A nonrevolver is a credit card holder who pays their balance in full each month within the stated grace period of the credit card account. By using the card in this manner, the account holder does not incur finance charges or interest payments.

BREAKING DOWN 'Nonrevolver'

Nonrevolver is a term that refers to an individual who pays their credit card bill in full each month. By not carrying a balance, a nonrevolver does not incur any interest charges, and by paying on time, he or she does not incur any late fees. The credit card company does not earn any interest or non-interest revenue from the account as it is paid off monthly. Instead, the customer benefits from the convenience of credit cards over writing checks or using cash. Because of this, nonrevolvers are sometimes labeled "convenience users."

Nonrevolvers typically pay more attention to the grace period, the time between when a bill is sent and interest is charged on the unpaid balance, than the annual percentage rate on the card, since the holder does not intend to carry a balance. In addition, nonrevolvers are likely to make sure they do not incur an over-the-limit fee or use the card for cash advances, which incur a cost as well.

Why do credit card companies loan to a nonrevolver?

Credit card issuers sometimes view a nonrevolver as being potentially a less profitable customer for a credit card company than a revolver, or someone who carries a balance from month to month. In fact, credit card companies can still earn money from nonrevolvers. Credit card companies charge merchants around 3 percent on credit card transactions. So if a nonrevolver uses their credit card to charge $5,000, even though the balance is paid in full, the credit card company still earns around $150 from the merchant fees. Credit card companies can also charge an annual fee for using the card, another opportunity to monetize the credit card accounts of nonrevolvers.

Why do nonrevolvers use credit cards?

Nonrevolvers choose credit cards over cash or debit card for various reasons. Credit cards offer convenience and protection, and nonrevolvers can also take advantage of the grace period credit cards offer. The grace period is the number of days between a consumer’s credit card statement date and payment due date when interest does not accrue. The grace period only applies if the consumer paid his or her last credit card bill in full and on time and didn’t carry a balance for any portion of the previous billing cycle.

Credit card reward programs also attract nonrevolvers. Since nonrevolvers do not carry a balance and do not pay any interest, a rewards card that offers 1 percent to 5 percent back on purchases means it’s possible for a nonrevolver to make money from using a credit card.

RELATED TERMS
  1. Minimum Monthly Payment

    The minimum monthly payment is the lowest amount a customer can ...
  2. Revolver

    A revolver is a borrower who carries a balance from month to ...
  3. Credit Card

    Issued by a financial company giving the holder an option to ...
  4. Secured Credit Card

    A secured credit card is a type of credit card that is backed ...
  5. Credit Card Debt

    Credit card debt is a type of unsecured liability which is incurred ...
  6. Universal Default

    Universal default allows a credit card company to raise a card’s ...
Related Articles
  1. Personal Finance

    3 New Types Of Credit Cards To Look For

    These three types of credit cards are becoming popular with customers looking to pay less fees and build up their credit scores.
  2. Small Business

    How to Use Small Business Credit Cards

    A small business credit card can be a convenient way to increase your company's purchasing power, enabling access to a revolving line of credit.
  3. Personal Finance

    Credit Card or Cash: Which To Use?

    Credit cards are more convenient to use than cash, but they're not always the best choice. Here is why you should and shouldn't pay with a credit card.
  4. Personal Finance

    Credit, Debit and Charge: Sizing Up the Cards in Your Wallet

    Not all plastic is equal! Learn the difference among the three kinds, and how each can affect your finances.
  5. Investing

    Investing in Credit Card Companies

    Find out why investing in credit card companies requires keeping an eye on consumer indexes and the overall health of the economy.
  6. Personal Finance

    Best Credit Card Features For Students

    Students should look for credit cards that charge no annual fees, have a low introductory interest rate and offer rewards or money.
Trading Center