Two ways to set up a revolving debt
- Line of credit equivalent to an overdraft, you can draw on this reserve by check or wire transfer.
- Credit card or financial institution or department store will give you a card with which you made your purchase.
However, the law of consumer credit provides protection of consumers against loyalty cards of department stores with credit function.
Now, the cards of loyalty cannot operate in credit payment are prohibited. They must possess two functions: credit or cash.
In addition, the cash should be enabled by default, thus preventing the consumer to start its revolving debt without realizing.
The process of credit payment must be active from the consumer. It should therefore specify when the checkout or upon receipt of the monthly statement.
Finally, practices regarding promotions department stores are also impacted. No promotion can now be linked to a credit payment.
Benefits of revolving credit
Revolving credit is popular because it’s extremely flexible
– You only use what you need.
– Interests relate to the amount used, no interest on the unused portion.
– As soon as you put money on your account, this is a refund, and you only pay interest on the amount repaid.
– This is the big advantage over other forms of consumer credit for which, once you set the amount and duration; you must use all your credit until its end (unless you make a prepayment).
– Free use of revolving credit without justification.
– A more easily negotiable than and affected loan.
– Short-term loan.
Disadvantages of this credit
– Revolving debt is the most expensive consumer credit.
– Credits generally on small amounts seen rates.
If you use this credit to purchase a property and that property is not delivered or defective, the monthly repayment must continue, unlike an appropriation stops with non-delivery.
Receive legal protection
If your revolving credit is less than a specific amount indicated, it is likely to enter the legal definition of consumer credit and therefore enjoy the legal protection.