Are you looking for a small credit line to facilitate the purchase of everyday consumer goods, or do you simply want to have a reserve of liquidity available at any time?
The revolving credit might interest you. A quick overview of this common credit practice.
What is revolving credit?
Revolving credit is a credit line that can be granted to you by a bank or by certain intermediaries such as large retail stores, which act – in a way – like a credit intermediary.
What is it used for?
Revolving credit is widely used for everyday consumer purchases such as high-tech purchases (computers, tablets, televisions, etc.) as well as for everyday consumer products (washing machines, etc.). This is why it is not uncommon for this type of credit line to be offered in large retail stores.
What interest rate?
These credit lines generally cover relatively small amounts ranging from 1,500 to 5,000 €. Indeed, they are intended to finance everyday consumer goods. Under these conditions, the interest rates applied are generally quite high, exceeding 10%. In fact, the smaller the borrowed amount, the higher the interest rate associated with the credit.
How does it work?
With revolving credit, you have a credit line for a determined amount that you can use each month. Suppose you have a credit line of 3,000 € per month. This means you can withdraw up to 3,000 € from this line in a month.
Of course, you will need to repay each month an amount that will be calculated in proportion to the amounts withdrawn plus interest. Thus, if you only spend 750 € in the month, your repayments will be calculated on this amount plus interest. Your credit line is replenished each month.