Some banks have a specific type of personal credit that they call credit online. In this article we want to show you what is an online credit and its dangers. Know that you are an important source of financial problems, so be very careful.
Online Credit – What Is It?
An online credit or line of credit is a specific case of personal credit . Also known as revolving loans (or rol-over). In practice, it is a financial product that resembles the debt of a credit card. In few words:
- Credit Limit – A maximum amount of credit is defined (on credit cards the ceiling is available). Until you reach this level, you can use the money as you want. You can pay part or all of it and use the available money whenever you need it.
- Amortization of the Loan – You can repay your loan whenever you wish. When you repay the loan you are releasing capital to borrow in the future. Despite this flexibility, you have a minimum amount that you have to pay that is typically set to cover the interest amount (and thus avoid every month increasing the amount owed).
What’s the Difference of an Online Credit and a Credit Card?
The mechanics of online credit operation is very similar to the functioning of credit cards. However, there are some differences that need to be known:
- Use of Online Credit – To use online credit you must ask the financial institution (by telephone) to transfer the amount to your current account;
- Convenience of the Card – The credit card is a card … which means that it has a lot more flexibility of use. However, if you want to use cash you will need to use the cash-advance facility that has unpleasant commissions.
What is the danger of these credits?
Both online credit and credit card have a danger. They are very convenient ways to have access to credit, which being an advantage represents a great temptation for consumption. If you are afflicted, you have money available here. It may be very convenient but the convenience pays dearly (and a lot).
As we mentioned earlier, these types of personal credit represent one of the major sources of financial problems in Portugal. It is not by chance that convenience is one of the great marketing weapons of financial institutions. What happens if you can not pay your installments?