Today, taking out a loan has become the most common thing in the world: people no longer wait until they have saved enough to purchase the object of their desire, but take out a loan instead. There are now so many loan forms and types on the market that it is not easy to keep an overview. So you have the revolving credit, a loan form of which it is not always clear how it works. You will not receive a sum of money in your account here, but instead you work with a credit limit: the maximum amount that you can borrow. You can withdraw money until your credit limit is reached, but you can also leave this limit for what it is and only withdraw a small amount. you can withdraw money again and again until your credit limit is reached.
Interest on the revolving credit
Borrowing money, also in the form of a revolving credit, is not free. However, you only pay interest if you have withdrawn money from your revolving credit. If you have a credit limit of, for example, 10,000 euros and have spent € 2,500 on this, you will only pay interest on the € 2,500 withdrawn. Paying the interest and the repayment usually starts in the same month that you have withdrawn the amount. So you immediately start paying off your revolving credit.
If you have taken out the full revolving credit, you can only withdraw money again after you have repaid (part of) your loan.
The benefits of the revolving credit:
- Handy if you don’t know exactly how much money you need, or when;
- You only pay interest if you actually use the revolving credit;
- Variable interest rate, but this can also be a disadvantage.