How to properly manage your revolving credit?

Posted on June 21, 2020
manage your revolving credit

Revolving credit , formerly known as revolving credit, is a great way to deal with unexpected expenses or to meet an unexpected need for cash. Its operation is simple: a sum of money that can be used freely - in part or in whole, is made available to a borrower. And this reserve is replenished as and when reimbursements are made. Here are three ways to best manage your revolving credit, without exceeding the limits of its flexibility.

Choose the right repayment period

The borrower has the option of choosing the repayment term when subscribing to a revolving credit. However, you should know that a long-term loan with low monthly payments is convenient, but has a higher total cost. Therefore, it is advisable to opt for a repayment period well in line with your borrowing capacity .

A borrower with a comfortable financial situation should not hesitate to repay his revolving credit as soon as possible. At the same time, he will benefit from a relatively attractive interest rate. Note that the regulations impose the repayment of a minimum amount at each maturity in order to provide borrowers with more security in the management of their credit.

Avoid accumulating renewable credits

The rate of a revolving credit is higher than that of a consumer credit without proof . This fact must in particular be taken into account before deciding to take several revolving credits. Subscribing to several renewable credits may indeed seem advantageous at first glance.

But the total cost of all of these operations can have a significant impact on the borrower's budget in the future. It is even very likely that an accumulation of this type of credit will lead to over-indebtedness if the borrower is lacking in prudence. Thus, foresight must be in order, even if the granting of a loan is authorized by the credit provider.

Finish repaying a revolving credit before taking another

It happens that faced with a lack of cash, we are tempted to take a new revolving credit while another previously subscribed has not yet been fully repaid. However, this practice involves a risk if one is not sure of being able to repay the new loan in the future.

It may be prudent to see how to simulate revolving credit before deciding to take it. And in the event of repayment difficulty, it is preferable to approach your credit provider to discuss a new installment. Otherwise, be aware that it is possible to terminate a revolving credit agreement at any time even if the duration of it is one year renewable.