Revolving debt is a form of credit consisting to make available for a borrower an amount of money reusable as and for reimbursement to finance purchases not predefined. It is a particular form of consumer credit and therefore falls within the relevant regulations.
The renewal of the revolving debt occurs gradually as repayments of the borrower within the amount authorized by the agency and to the portion refunded. This form of credit is usually accompanied by a credit card used in the network of affiliated businesses who accept the card. If this formula has the advantage of flexibility, it is usually expensive, can be a dangerous incentive to overuse – even over-indebtedness – and therefore requires excellent management of an account.
This revolving debt easily obtained, can be used at any time and replenished as and refunds, contains clauses often blurred and reimbursement rates apply exorbitant familiarly regularly above 20% interest. It is promoted by institutions with a lot of advertising campaigns. Fits and sometimes without the consumer’s knowledge, loyalty cards in stores.
It is not for nothing that the revolving debt is also known as “revolver”: “All studies show the revolving credit facility is a terrible instrument of indebtedness”.
As revolving debt, with interest rates very high, makes usually a lot of damage, and is under the supervision of consumer associations.
To stop the abuse, there are three requests to suggest: the obligation for credit institutions to propose, as an alternative to revolving debt, classic credit. Also these offers are no longer associated with a loyalty card, thus creating confusion in the minds of customers. Finally, for a loan of $1,000 the creditworthiness of the borrower must be verified.