Who often comes into the situation of having to resort to the credit line, should compare the current account on this factor. Between the individual accounts there are large differences in the interest on the credit line. Most branch banks require more than 10 percent. Direct banks now have more moderate interest rates. Who is a customer at the Folkabanks or a savings bank, has a discretion of about 3 net monthly salaries. But the banks also deliberately accept an overdraft. Then the overdraft rate, which is again twice as high as the dispozins.
Tip from the editor
Only use the credit line at short notice and in exceptional cases. If you have a financial shortage to bridge for a fixed short period of time, the credit line is an acceptable solution. But if the money has to be available for an indefinite period of time, you should look for other alternatives.
Debt loan can lead to debt
Who takes up a installment loan, who has to file an application, prove his creditworthiness and thereby gets his own financial situation clearly in mind. However, the credit line can be easily used without any hurdle. It is automatically much easier for the person concerned to spend money which is not available.
If the credit line is overdrawn, the account holder still has the option of using the overdraft facility. At this overdraft, the banks earn very good money and tolerate this overdraft. However, at some point the time comes when the banks turn the money off.
At the latest then the customer is in the debt spiral, because an overdraft has a negative effect on the credit bureau. It is not possible through the credit bureau entry to reclassify the credit line in a installment loan. The horrendous interest rates continue to lead into the debt trap.