The revolving credit is one of the financing most used by individuals. Yet this money reserve is one of the main causes of excessive indebtedness of French households! Find out: how the cash reserve is distributed to individuals in the credit market? What are the risks of its use? And how to fix it?
Revolving credit: its advertising!
With my revolving credit, I can settle everything! This is the primary argument for banking institutions to sell a revolving credit contract to their individual customers. Revolving credit to finance any expense. A cash flow problem? Use your cash reserve to make up your overdraft!
Or an exceptional expense to settle such as a bill heavier than expected. Then your banker offers to spread the payment of the expense in several on credit thanks to your revolving fund loan. You are also explained that the funds can be obtained very quickly.
That is to say under simple request by phone or on the internet via the bank's customer area. You request the necessary amount, and receive a transfer to your bank account within 48 hours. In addition, we explain to you that you have the advantage of having a credit which is reconstituted as and when your repayments are made.
As a result, it becomes available again. In other words, it is like saying: “You are lucky to live on credit! ". You manage and repay at your own pace! Also the benefit of flexibility in the management of revolving credit with the postponement of monthly payment.
Revolving credit: what we are not telling you!
Attention should be drawn to the fact that revolving credit is a danger for good budget management. Its use strongly encourages consumers to consume more with easily borrowed money. Money obtained without great difficulty, but at what cost? The total cost of credit is often high.
The borrowing interest rate is not fixed, it is variable. Although the call rates are low, quickly, depending on the amount used, the interest rate can be revised beyond 20%. Your monthly payments are made up of a significant portion of interest. And the repaying capital is made available to you to use again and pay high interest again.
It is much more secure for budget management to take out a personal loan at a fixed rate and monthly payments. Very often, we find that the accumulation of revolving credits degrades the management of bank accounts. The vicious circle of digging into one reserve to repay another leads to over-indebtedness.
It is also recommended to deal with excessive indebtedness by anticipating through a revolving credit restructuring operation. This allows revolving credits to be turned into a single fixed rate amortizing loan. With a monthly payment adapted to the repayment capacity of the borrower (s).