The revolving loan is one of the most used by individuals. Yet this reserve of money is one of the main causes of excessive indebtedness of French households! Find out: How is the cash pool distributed to individuals in the credit market? What are the risks of using it? And how to fix it?
Revolving credit: its advertising!
With my revolving credit, I can fix everything! This is the primary argument of banking institutions to sell a revolving credit agreement to their individual customers. The revolving credit for any expense. A concern for cash? Use your reserve of money to fill your discover!
Or an exceptional expense to pay such as a bill heavier than expected. Then your banker proposes to spread the payment of the expense in several on credit thanks to your loan with revolving fund. You are also told that funds can be obtained very quickly.
That is to say under simple request by phone or on the internet via the customer area of the bank. You request the necessary amount, and receive a transfer to your bank account within 48 hours. In addition, you are told that you have the advantage of having a credit that as your repayments are reconstituted.
As a result, it becomes available again. In other words, it amounts to saying, “You have the chance to live on credit! “. You manage and repay at your own pace! Also the benefit of flexibility in the management of revolving credit with the postponement of monthly payment.
Revolving credit: what we do not tell you!
It should be noted that revolving credit is a danger to good budget management. Its use strongly encourages consumers to consume more with money borrowed easily. Money obtained without much difficulty, but at what price? The total cost of credit is often high.
The debtor interest rate is not fixed, it is variable. Although call rates are low, quickly, depending on the amount used, the interest rate can be revised beyond 20%. Your monthly payments are composed of a significant share of interest. And the repayment capital is made available to use it again and pay high interest again.
It is much safer for budget management to subscribe to a fixed rate personal loan and monthly payments. Very often, we find that the accumulation of revolving credits is degrading the management of bank accounts. The vicious circle of digging on one reserve to repay another leads to over-indebtedness.
It is also recommended to deal with excessive debt by anticipating a restructuring of revolving loans. This allows revolving loans to be converted into a single fixed rate loan. With a monthly payment adapted to the repayment capacity of the borrower(s).