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.

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