Revolver vs. Transactor: What Kind of Credit User are You?

Most credit users are revolvers, meaning they pay more to use credit.

Do you know what kind of credit user you are? Revolver or transactor?

Credit card companies divide credit users into three basic groups.

  • A “dormant” user doesn’t use their account regularly, so it becomes inactive due to lack of use.
  • A “revolver” is someone who carries balances over from one month to the next. The name comes from “revolving debt,” which refers to debt accrued on an open credit line, like a credit card.
  • A “transactor” is a person who pays off their balances in full every month. The name comes from “credit card transactions”

According to a new study by the American Banker’s Association (ABA) almost half of credit card users are revolvers (43.7%). Only 29.1% are transactors, the remaining 27.2% are dormant. The ABA crunched the numbers to find that roughly 60% of all active accounts carry a balance.

Revolver vs transactor – which is better?

From a consumer perspective, being a transactor is almost always better because it saves you money. A creditor only applies interest charges on a balance that you carry over from one month to the next. So, if you start a billing cycle with a zero balance and then pay off the debt in-full you avoid interest charges entirely. However, if you start the month with an outstanding balance or don’t pay off your charges in-full then you face interest charges.

Credit card companies prefer revolvers because interest charges equal profits for them. Transactors effectively use credit cards like month-to-month interest-free loans. They never charge more than they can afford to pay off. So, they never pay interest charges.

“Paying off debt in-full every month is the smartest way you can use credit cards,” encourages Gary Herman, President of Consolidated Credit. “Credit cards don’t have to be the enemy of a stable, healthy financial outlook when you use them strategically.  If you get all the convenience of credit without the interest charges tacked on, that’s winning.”

More months means more opportunities to apply interest charges

The longer you let a credit card debt carry over, the more it costs. Let’s say you make a $500 purchase on a credit card with an average 15% APR for purchases. On a standard credit card payment schedule:

  • It would take 44 months (almost 4 years) to pay off with minimum payments. Total interest charges equal out to $185.87
  • If you make $50 payments, you can eliminate the debt in 2 years with $78.97 in total interest charges.
  • With $100 payments, you drop the payoff down to 6 months with $19.63 in interest charges.

“Interest charges stack up quickly,” Herman advises. “This is why you want to eliminate debt as quickly as possible. And you certainly don’t want to leave small balances to accrue interest charges month after month. Pay them off and cut that added cost out of your budget.”

If you’re struggling to pay off credit card debt so you can minimize runaway interest charges, we can help. Call Consolidated Credit today at or complete an online application for a free, confidential debt evaluation.