The total cost of revolving credit depends on the time of use; it varies depending on the duration and the actual amount of the overdraft account.
Revolving credit is a financing solution interesting when used with caution. Otherwise, it can quickly lead you to debt.
To avoid the pitfalls of revolving debt, better understand what settings to use.
Revolving credit for contingency management
Revolving credit is intended to deal with urgent expenditures (plumber, pay late, etc…) and not purchasing pleasure. For the latter, it is better to choose your savings or credit more traditional.
Financing less risky than leaving open
Your bank will undoubtedly give an overdraft. If you are planning a short-term loan, it is best to use your revolving credit rather than explode the ceiling of your overdraft. The conditions are more interesting (monthly, fees, etc…)
– A reserve of free credit as long as you do not use it.
– As soon as you put money on your account, this is a refund, and you only pay interest on the amount refunded
– It is a more easily negotiable than an affected loan.
Good to know: the rate of revolving credit the highest consumer credit (between 14 and 22%). It is therefore preferable to settle as soon as possible, in advance (amount paid to settle any or the entire amount borrowed).