Revolving credit means that the loan is recharged automatically after use.
Revolving credit was originally called revolving credit, an English term that allowed credit organizations to not blur the definition of this product but also to make it more attractive from a marketing point of view in the eyes of borrowers. Without knowing how a loan works and using a term that can be misleading, it is easier to attract borrowers in search of financing.
Revolving loan: principle
The revolving credit is therefore a reserve of money available and usable at any time, its use leads to the payment of monthly payments, it is also possible to choose the number of repayments, namely in 2 installments, 3 installments, 5 installments, 10 times or even 20 teams. These are the famous “3 times free of charge” payments offered in supermarkets and other commercial brands. As soon as the borrower has repaid the sums due, the credit is recharged and can therefore be used again, hence the name renewable.
Revolving credit is however known to offer the highest interest rates, often close to the 20% limit set by financial authorities. It is also a loan that is involved in 80% of over-indebtedness files, which casts doubt on its interest for households. It is especially when it is misused or misunderstood that it represents a danger.
Avoid accumulation of revolving loans
If the revolving loan makes it possible to settle one-off purchases over several times without having to save, it can be expensive in the long run and above all create real financial imbalances in the long term, especially when several revolving loans are accumulated. A simple deferred payment associated with a bank card means that a revolving credit is hidden behind the payment offer. It is therefore necessary to ensure that you are aware of the existence of these loans and above all to seize the opportunity to group them into one, in order to avoid the effects of over-accumulation and therefore of impossibility of repaying them. The revolving credit grouping is precisely an operation intended to gather these loans in only one, which makes it possible to start again on the basis of a classic consumer credit, without recharging or reserve of money.
Many households in fact have revolving credits in the process of being reimbursed without knowing it, quite simply after having subscribed to a payment or loyalty card offer. These loans, not necessarily known and used for a single payment in installments will weigh on the household debt ratio. This can therefore jeopardize certain projects because the remaining living is not enough. Being aware of the existence of these loans is important, but solutions must also be remedied to avoid repaying too many loans at the same time. The grouping of loans precisely makes it possible to abrogate these problems and to fix a single reduced monthly payment, simpler to manage. Note that the simulation procedures are free and without obligation for this funding.