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Too many revolving credits to repay: what solution?


Money reserves on loyalty cards. Borrowing is relatively easy these days. Banks are, however, responsible for verifying carefully the borrowing capacity of an applicant before releasing the funds. In general, it is enough for the borrower to demonstrate a sufficiently stable financial situation to obtain a loan.

The procedures are even simpler on the internet and in shops, where consumers can make their purchases on credit for short or medium periods. Online merchants often offer payment facilities in installments, while stores have loyalty cards in their sleeves containing a reserve of money, no more and no less than revolving or revolving credit. Some customers will then use these funds without knowing the real consequences.


Revolving credit rates sometimes higher than 15%

Revolving credit rates

Although they are quick to unlock, these reserves of money are to be used with caution since interest rates are significantly higher than the rates of a car loan or a work loan for example. They are indeed approaching the highest thresholds (usury rate) that a credit rate can reach in a bank loan. The reason is as follows: the rates of financing allocated to a project are lower than a loan with free use of funds.

Revolving credits are therefore as easy to use as it is dangerous since excessive unlocking can lead to accumulating monthly payments. For a household, the risk is then to reduce the remainder of living to levels deemed too low. The remainder is also an important indicator since it designates the part of the income remaining, after the payment of recurrent charges, used by a household to cover daily expenses. The banking establishments estimate that above 33% of rate of indebtedness, the hearth is exposed to difficulties to manage correctly the payment of its monthly payments without cutting back on its remainder to live. However, this threshold is not applicable for very high earners.


Combine revolving credits in a credit buyout

revolving credits in a credit buyout

One of the solutions in the face of too much consumer credit is to make a request to buy consumer credit from an expert in banking intermediation who will analyze the feasibility of a project. The repurchase of consumer loans is an operation carried out by a bank which will fully reimburse the amount of credits still due after a loan offer is accepted by the borrower. No action with its former creditors will be necessary on its part.

Once signed, this new loan brings together all of the consumer loans, including revolving loans, so that the borrower has to pay only one reduced monthly payment each month with a unit interest rate. Thanks to the repurchase of credit, the fall in the monthly cartoons contributions to freeing from the remainder to live as well as to lessen the difficulties of a household to reimburse its old loans.

In order for the bank to be able to lower the maturities, the duration of the loan is generally lengthened, which increases the overall cost of the operation. On the other hand, it is possible that the difference between the initial interest rates on revolving loans and the new loan repurchase rate is large enough to lower the total cost.