Has your old trusty boiler just decided to give up the ghost? Is your car causing trouble again and refusing to start this time? Is your roof starting to show signs of wear and tear here and there? These common day-to-day problems correspond to as many unforeseen as urgent expenses. Do you currently lack sufficient liquidity to cope with these expenses? Don’t worry: several solutions are available to you! Consumer credit, revolving credit, or overdraft: the choice is yours. Credafin helps you to see more clearly…
Revolving Credit: Convenient but Dangerous
The revolving credit, also known as permanent credit or credit revolving, is part of the large family of consumer credits.
Through revolving credit, the financial institution provides you with an amount of money that can be reused as it is repaid. In this specific context, there is no obligation to justify the purchases associated with it. It is essentially a cash reserve that can be used more or less freely.
However, it is crucial to be cautious with revolving credit… Interest rates, for starters, are generally higher than those applied to standard consumer credits. Furthermore, this type of practice can lead to the normalization of credit use. Hence, while revolving credit can be interesting for infrequent and urgent usage, be wary of using it to fund everyday expenses, as this may lead you into the vicious cycle of over-indebtedness.
Bank Overdraft: Pros and Cons
Many banks offer their clients an overdraft option. The overdraft amount generally depends on the client’s financial situation. This service, which can be either free or fee-based, allows covering various unforeseen daily expenses.
Overdrafts obviously incur charges. However, it won’t cost you much if the temporarily negative account is quickly replenished. Otherwise, it can become a risky move… Failure to repay within the stipulated timeline can result in being reported to the BNB.
Consumer Credit: Flexible and Adaptable
If the amount you wish to have is substantial, the most suitable product is without a doubt the consumer credit. It allows borrowing up to €75,000 and spreading repayments over a longer period. However, it generally requires more time to access the funds compared to a bank overdraft or revolving credit, which are immediate.
Although the interest rates for consumer credit are lower compared to revolving credits, they are even more advantageous if you opt for a dedicated loan instead of a personal loan. Justifying the use of funds indeed allows for better conditions.
Feel free to seek advice before taking the plunge!
