Revolving credit is an English term which means: Revolving credit also called permanent credit. This can be granted to you by your bank, but also by a credit organization or by a large area. The principle is simple, after knowing your income and your expenses, the organization determines an amount, a sum of money that is allocated to you. Then, you are free to use it or not. It is a reserve of money which is replenished as you repay.
Advice: However, be careful not to exceed the commonly accepted debt ratio (30% of your income).
If the credit is taken out with a bank :
At your request, this can release the total amount or a part only, either by logging onto their website, or in some cases by telephone or at the counter. No proof will be requested, the amount will be transferred to your current account. You will choose the amount and duration of the reimbursement yourself (with a pre-determined monthly minimum). Then at any time you can make an early repayment of all or part of the capital remaining due (without penalty). You can also adjust the amount of the monthly payments.
If the credit is taken out with a store :
A payment card is then issued to you, which in most cases allows you to choose the method of payment at checkout. The solutions most often proposed are: in three installments, with deferred debit or in the form of conventional credit. Almost all of these cards also allow you to withdraw cash.
This type of credit combines flexibility and ease of use as well as the possibility of benefiting from promotions or sale prices even if the state of your finances at the time is not in good shape. The store cards also make it possible to accumulate “gift points”.
The rate of credit is very often higher than that of a traditional loan. We must therefore be vigilant. And ask yourself the right questions during the purchase, in fact, does it make sense to pay a purchase on credit with a high interest rate to earn a few USD on an item in promotions? If you plan to use your revolving credit for the purchase of your car, ask your banker for a comparison with auto credit. (you might be surprised). It is good to specify that for some time, certain associations of consumers alert the public authorities and the consumers on the dangers of this type of payment which would lead more and more households to over-indebtedness.
Info : Since 1998, banking establishments have had the obligation to send the borrower a proposal to renew the offer 3 months before the anniversary date of signature of the contract. To summarize, vigilance is required, do not forget that it is a loan even if it is presented to you in an enticing way.