Revolving credit is a form of consumer credit Credit-Debt-Loan

After an individual subscribed to this credit, credit agency or bank loan provider makes available this free money incurred.

Revolving debt is a permanent loan that automatically reconstructs as repayments of credit.

Repaying debts especially, the revolving debt is an easy loan to subscribe, and buy consumer goods and recreational services of their choice.

 

For the same revolving debt purchased, it is not possible to exceed the amount loaned.

This type of loan is formulated in two ways:

  • Line of credit, it is a kind of revolving bank overdraft received by check or transfer to bank account.
  • A letter of credit is granted by the bank.

 

This cash is increasingly used by credit card or private use anywhere specific and general.

 

For this kind of loan, it is a period of one year, renewable by tacit agreement.

 

The Court of Cassation has established that it is necessary to submit a credit institution provides funding renewal three months before renewal.

 

Obviously, the individual may send a letter to refuse the renewal of the revolving debt facility.

 

Revolving loans are causing an increasing number of cases of indebtedness if the revolving credit is used as abusive.

 

 

 

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One of the most important ways to achieve and maintain excellent credit scores is to manage your revolving debt.

 

When I say, “revolving debt”, I am referring to a credit account that you have when the monthly payment can vary. Credit cards are the most common form of revolving debt.

 

Of course, “revolving credit” refers to just about everything in your wallet or plastic bag is that you can use to buy something. This includes American Express, Discover Card, MasterCard, or Visa credit card. It also includes maps of retail stores such as gas cards.Credit Cards

 

The exceptions are credit cards and debit cards. These are small plastic and have a MasterCard or Visa logo, but they are not really credit cards. They are more like plastic checks than anything else. Debit cards have nothing to do with your credit score.

 

The only way to really find out if revolving debt lowers your scores is to do a quick analysis of your revolving credit accounts.

 

Your credit score will affect the lower limits of your credit card. Credit scoring models used by the major credit bureaus consider the total percentage of revolving credit you have available. Lower credit limits reduced this ratio, lowering your overall credit score. It is not recommended to lower the limits of your credit card.

 

Revolving debt report

 

Credit bureaus use a scoring model generated by computer to calculate your credit score. One of the factors considered by the scoring model is the percentage of revolving credit available on your credit cards. As this ratio decreases, your credit score decreases. Conversely, you can trigger your credit score by increasing this ratio. Since the lower limit of the credit card adversely affects this ratio, you should not ask for credit limit reductions, and you must take precautions to help prevent your credit card issuers to lower your credit limit.

 

Calculating revolving debt report

 

To determine your revolving debt report, take your total balance on all revolving credit accounts and divide this number by the total credit limit on any revolving credit accounts. A revolving account is a type of credit account that allows you to draw continually funds up to a maximum credit limit.

 

Avoiding reductions in credit limit

 

Credit cards generally retain the right to reduce your credit limit at any time. You can take steps to reduce the probability of a reduction in credit limit. Always pay at least the minimum monthly balance on your credit card bill before the payment due date. Note the limits of your credit card and avoid exceeding any of these credit limits. Maintain good credit. Credit cards will reduce your credit limit if there is any adverse change in your overall credit profile.

 

Increase the rate of revolving debt

 

It is also possible to increase your revolving debt report and score through planning Credit. Avoid closing lines of revolving credit. Closing credit lines will lower your ratio of revolving credit. Try to keep your total revolving credit report over 50 percent. If you use more than 50 percent, apply for an additional revolving credit so that you can reduce your revolving debt report below this 50% threshold.

 

 

 

 

 

 

 

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Debt Payment Following this situation and especially to improve our heating system, it left us with more than we tempted by one or another of these credit offers called “revolving debt” or” reserve money ” that overwhelmed our mailbox at this time. So we went, without knowing it, to transform our dream of owning a home in a nightmare.

 

This account and available revolving debt, is actually a loan of money from a certain sum, which is at your disposal and you can use and abuse, within the amount of money given to you. If you are removing a portion of this amount, you will pay interest based on the amount you use and the monthly repayments will be, too, depending on the amount.

 

As the reimbursements, capital money available is recovering and the amount of monthly payments decrease if you do not touch it capital. It is also called a credit rebuild. That makes the fact that you have always a certain amount of money depending on your repayments. You can unlock it at any time.  Everyone must be aware that the interest rate for these loans is very high. But when you are in need, we never lend attention to these details.

 

So we got our first account available with ease and a disconcerting speed. This  credit had paid our new coil and allowed to start the work of fencing the property, the replacement of small appliances having served their time, etc..

 

Noting that after 3 months, had again a little capital available, felt a little less poor and began to plan to make more work than expected. So with family budget with the money received a serious boost, you did, you must admit, a little less attention to your spending money.

 

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The contract

 

The contract shall be established and be given to you during the initial subscription of your credit. A contract shall be established each time you request an increase in your credit. It shall specify the date, the name and address of the lender, your name and address, the credit repayment (levy on bank or postal or check remittance), the amount of credit allowed, repayment terms.

 

Warning: The total cost of credit depends on the use you make; it varies according to the amount and duration of the overdraft effective on your account. It cannot be you announced the signing of the contract. It should be vigilant about the annual interest rate (APR: Annual Percentage Rate) which includes all the costs of your loan (fees, costs of credit card).

 

Credit Card – breaking link between loyalty card and credit use Revolving Debt Offer

 

Credit cards are:

  • Whether private cards accepted only by a sign or group of signs, they are also often used as loyalty cards (this is the case in department stores or hypermarkets).

 

  • Either accepted cards in the same way as a conventional bank card supported on the interbank network national or international network.

 

In all cases, the words “credit card” must be specified in legible characters on the front of the card.

 

Loyalty cards that don’t allow a credit payment are prohibited. Indeed, the cash payment via credit card and / or loyalty associated with revolving debt becomes the rule. It is only by express agreement that consumers pay on credit. By default, this function is the cash payment of the loyalty card that is activated. Therefore, the consumer receives promotional benefits associated with the card business without having to use the associated revolving debt.

 

Information during the contract

 

The lender must send you each month before your payment deadlines, a document which contains in particular the fraction of capital that you can still use, the amount of maturity in distinguishing the part corresponding to interest, the total amount payable, the repayments already made highlighting the share paid in respect of capital and paid in respect of the interest and other charges.

 

The contract is a one year renewable contract; the lender must give you three months before the expiry of the terms of the contract renewal. If these new conditions do not suit you, you can oppose to 20 days before their implementation by returning a reply slip that the lender has attached to its new conditions. In this case, you will repay the amount of the reserve already used to the old conditions but without being able to re-use your line of credit.

 

 

 

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There is a multitude of ways to reduce its debts. A simple way is obviously to consume less, consuming less is quite intelligent. Over consuming is a trap to avoid. For those who have fallen into, here are some possible strategies to reduce its debts.

 

Transfer your balance elsewhereSqueezed Debt

 

Your revolving debt and consuming paid by credit card, often bear debts highest level of interest. Reduce its debt can simply say reduce interest rates. Obviously, the higher your interest rate is, the more you owe money … plus your borrowing departure. It is the goal of this strategy is by reducing your interest rate will reduce your debts by ricochet.

 

How to do that? You simply need to find another offer of credit with a lower interest rate.

 

Warning: It is possible that your institution charge you transfer fees, then learn. Also, do not cancel your credit card immediately as your credit history will be destroyed.

 

Negotiate to reduce debts

 

It may seem odd to ask your institution to reduce your interest rate. But banks and other companies distributing credit do not like losing customers. So, instead of transferring your credit elsewhere to lower rates, negotiate with your representative. If you have a good credit record (read: always pay its debts on time) it may be easier to reduce your rate and thus reduce your debts.

 

Loan Consolidation

 

This can be a good solution. This is often the ultimate solution. For those who have a lot of debt, exercise can be beneficial. It is to consolidate all your debts into one. Normally, the bank does not offer you immediately. If it refuses, then you know what you have to do: negotiate or go elsewhere.

 

This strategy will be profitable for you so obviously, consolidation reduces your interest costs. Note that this kind of loan is an installment and non-revolving debt. So you know from the start when the deadline for payment of your debt will end.

 

Reducing debt is the first step to optimize your personal finances. Must take responsibility and consume reasonably…

 

 

 

 

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Revolving Debt PurchaseThe answer to this question is tricky as revolving credit is stigmatized and is considered as one of the factors favoring the indebtedness. Moreover, it is not obvious to infer a causal effect between revolving debt growth and development of indebtedness, it is clear that over-indebted people usually have one or more revolving debts in their liability.

This observation is probably the main advantage of this type of credit, namely its ease of use and flexibility. Indeed, once the first contract is signed, the use of revolving credit is not subject to sending any form or any supporting documentation. Its use is free, of course within the limits of the reservation granted.

 

The downside of this simplicity is that it may encourage you to make purchases on credit recklessly, but more importantly, it can lead you – if you lower your income, for example – to tap into your line of credit even if your repayment capacity became insufficient. In this case, rather than give you a little oxygen, the use of revolving debt may worsen your financial situation – and so much more strongly than its use is expensive. Because the cost of revolving debt is a significant disadvantage, the high cost of credit is due to the high interest rates and low amount of deadlines. Many customers are also attracted by small installments and pay little attention to the annual percentage rate applicable. However, lower the monthly payment is, more the repayment period is long, and the cost of credit is high.

 

As for the opacity of the cost, it is explained by the annual change in the interest rate (hence uncertainty about the final cost) and the absence of indicative schedule to get an idea of the duration and the total cost of credit.

 

Tips

 

– If you need funding for a specific expenditure, better focus on traditional forms of credit (loan or loan allocated) whose the cost is clearly stated and generally lower than revolving debt.

– If you don’t have access to other forms of credit, avoid, insofar as possible, the too low monthly payments, and wondering at the end of the first year, to transform your revolving debt into a loan with fixed timelines.

– If you are experiencing financial difficulties related to a lasting change in your budget (or declining revenues up charges), avoid the revolving credit and get closer to commissions indebtedness.

– If you need cash and occasional passengers, revolving debt is an interesting product provided to prepay as soon as possible.

 

 

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The revolving debt Credit Card Debt

 

Revolving debt is a formula of consumer credit which is the provision of a sum of money that you can freely use. Freely, that is to say when you want (the credit line is used at any time) and as you want (it can be used in whole or partially, without having to justify its use). The amount available is replenished as reimbursements, within the authorized amount.

 

Principle of revolving debt

 

How does the revolving debt work?

 

When you purchase a revolving debt, you get a drawing right on a line credit (or “reserve”). The amount of the latter (“authorized amount”) is set initially by credit institution, but it can change over time, but not exceeding an amount ceiling. You do not need any interest as long as you do not use it; otherwise, the Interest is calculated on the fraction of credit used.

To use your reserve, you usually have several possibilities: either ask a check or bank transfer to your bank account, or use a specific card backed credit to make purchases. When you use your line of credit, a levy is made ​​on your bank account each month until the reserve is fully restored.

The amount of the monthly payment is contractually fixed, but some credit institutions allow modulation. The monthly payment is used both to repay the borrowed capital – and therefore to rebuild the line of credit – to pay the insurance premium in the due time, and to pay interest due for the month.

The interest rate is variable, both in time (the rate varies each year or quarter based on a benchmark) and on the amount borrowed.

 

The specific case of cards

 

There are three types of cards, which differ in the restricted or universal their use:

– The cards distributed and accepted only by a sign or by signs belonging to the same group. They also act as a loyalty card for large stores, chains of hypermarkets or distance selling companies.

– Cards accepted by all retailers have signed an agreement with a specialized credit.

– Cards accepted in the same way that a conventional bank card, based on the national interbank “CB”, even on an international network (Visa card, MasterCard…).

 

Important to know 

 

The benefit of the marketing and promotional benefits associated with the card cannot be subject to the use of credit, on the other hand, the creditor or credit intermediary is obliged to offer you the opportunity to pay in cash.

 

In the case of bank or store cards with the function of revolving debt the use of credit must result from the consumer’s express agreement expressed at the payment with the card or within a reasonable time upon receipt of his statement.

 

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Revolving Debt ChargesNeed money fast? ” Increase your purchasing power” ” It’s time to finance your desires! “; Slogans providers of revolving debt who do everything to make consumers believe that happiness is in ready. Revolving debts are distributed by banks, specialized credit institutions and retailers they allow the borrower quickly dispose of a sum of money which he can spend as he pleases. And the volume of credit available reconstitutes as of repayments.

 

But this freedom to spend is hard-earned: rates vary between 15% and 20%, and over a third is above 19%! However, if the revolving loans represent only 21% of total consumer credit to today’s households it is people with low incomes who rely primarily.

 

The different forms of revolving debt

 

There are two main types of consumer credit: appropriations and non-affected. The first, which represent 19% of consumer credit and finance a specified property (the purchase of a new car, a product appliances …) with a fixed rate and timing at which the debt is discharged. The latter are divided between personal loans (60%) and revolving debt (21%). Personal loans are intended to finance projects unspecified amount in advance, such as work or a wedding, at a fixed rate over a specified period. Revolving credit, also called “cash reserve” is a more complex product that serves as a tool of cash management to a household. This is the one that leads to more “bad debts”, which reduced the standard of living sustainably.

 

A juicy product for lenders

 

Subscribe to a revolving debt becomes as throwing amounts into the unknown: for example, if you ask for a “cash reserve” for an amount of $1 000 you repay only $40 per month, an amount that seems bearable. But nothing is said about the number of months during which you will have to pay this sum … Normal rates are variable – they change every three months depending on the evolution of credit conditions – the duration of repayments is regularly readjusted. However, in all cases, it will be long, very long. Weak installments, to entice the borrower lead to strongly extend the repayment period. And given the level of rates charged, the capital is repaid very slowly, since most used to pay interest monthly.

 

What constitute a quasi-rent for lenders, for which the revolving credit facility is very profitable despite the risk of default of a party borrowers. The pension becomes permanent even when the client decides to reuse the “cash reserve”. Entering into a debt crisis quickly turns into permanent indebtedness.

 

This trend is even more common than credit institutions lead to crime by increasing attractive offers, including via the Internet: promotional rates (for a few months), nothing to pay for the first three months, etc.. Hard to resist in a society where everything grows to consume: the ubiquitous advertising, social norms that make it incongruous today do not have a mobile phone, a flat screen TV, a living room, etc..

 

With the crisis, more households affected by unemployment or facing an unexpected expense, may use the revolving debt “increasingly, we find that households use credit to meet their basic needs and fulfill their truck. But why not use other forms of consumer credit, which offer the most often much lower rate? If some households do so for reasons of convenience, most have no choice: 15% of households do not have access to this type of credit. If a young couple of graduates, both in permanent contracts, can access a personal loan at 6% to buy a used car, a couple of the same age in precarious employment that will access revolving debt at 16%.

 

 

 

 

 

 

 

 

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Debt Traps This credit is simply at your disposal a reserve of money that you spend freely at your own pace, asking for a check or a wire transfer from your bank account, or by purchasing a card with specific backed credit.

Your reserve decreases each time you rebuild and as you pay off your credit.

 

Advantage and disadvantage

 

This type of loan is very versatile as you use it according to your needs, varying amounts within the limit of the maximum amount (or overdraft).

But beware: the cost is generally high. Interest rates are indeed higher than those of traditional consumer credit. In addition, the interest rate is variable each year.

 

Rules to respect

 

The revolving credit facility must meet not only the general rules of consumer credit, especially with respect to the submission of the initial offer, the withdrawal period, insurance companies, but also some specific rules to better inform and protect the consumer.

 

The preliminary offer

 

The initial offer must be established and be given to you during the initial subscription, but also each time you request an increase in your credit.

 

It shall specify the date, the name and address of the lender, your name and address, the credit repayment (levy on bank or postal remittance or check), the amount of credit allowed, repayment terms.

 

Credit Card

 

Credit cards are available

– Or store cards only accepted in certain signs and generally act as loyalty card.

– Cards are comparable to a conventional bank card backed by a bank or interbank network.

In all cases, the word “credit card” must be specified in legible characters on the front of the card.

 

The contract

 

Information during the contract

The lender must send each month before payment deadlines, a document which contains the fraction of capital still usable, the amount due in distinguishing interest, the total amount payable, the amount of the repayments already made highlighting the paid part in respect of capital and the paid part in respect of the interest and other charges.

 

Contract changes

 

At any time, you can ask:

– The reduction of your credit reserve,

– The suspension of your right to use your reserve

– The termination of your contract which means to repay the amount of the reserve already used to conditions of the contract.

 

Tips and Precautions

 

If you buy a product or a well in a store and the seller offers revolving debt to pay, be aware that:

 

  • You can within 7 days cancel your revolving debt
  • But your contract of sale, it will not be automatically canceled and you cannot cancel your purchase.

 

If you need funding for a specific purchase, ask the seller to offer a consumer credit related to your purchase (appropriation), it will be cheaper and if you give your credit within the legal period of 7 days, your contract will be automatically terminated.

 

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DefinitionRevolving Debt

 

Revolving debt is a reconstituted credit that offers a sum of money that can be used in whole or in part, that you pay on credit. Your revolving credit reconstitutes as your repayments. Revolving debt is free if you do not use the money provision. Like any consumer credit, revolving credit is credit that you can redeem in whole or in part, without extra charge. The amount of interest is calculated on the outstanding principal.

Peculiarities of the revolving debt

 

Revolving credit is a credit for one year, renewable annually by tacit agreement. It is possible to put an end by making a request to your credit agency.

 

Benefits of revolving debt

 

Revolving credit allows flexibility to the extent you use according to your needs. No justification for the use you want to make with this credit is requested.

 

The use of revolving credit

 

Example: This month, Kylie has to face unexpected expenses. Her car broke down and because of the cost of repair, it needs an additional 400 $ to finish the month calmly and not be discovered. She then chooses to purchase a revolving debt.  After a study and expiration of the withdrawal period reserve money is made ​​available by the credit institution. This month, she will not use it fully because it needs only 400 $. As to these reimbursements, the initial sum of money will be restored.

 

Later, she can use it again and pay the monthly payment every month she has chosen to open her credit reserve. She may even pay at once if she wishes.

 

 

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