With a revolving credit, you pay an interest and repayment amount every month, just like with any other loan. The higher a loan and the longer the term, the more interest you pay in total. So you can save a lot on your loan by paying it off faster, but with some loans, banks charge for this. This does not apply if you want to repay a revolving credit.
One of the big advantages of the revolving credit is that you can always repay extra. This costs nothing. Certainly with a personal loan, banks sometimes charge costs for this, because they will miss out on part of the interest if you pay off earlier. As a result, it is not always worth paying extra. But with a revolving credit this barrier does not exist, so you save a lot by repaying faster. In addition, your monthly payments decrease after each additional repayment, because the monthly repayment is then lower.
The bank can tell you exactly how to arrange an extra repayment. You can pay extra in two ways:
- Repay an extra amount once, for example if you have had holiday pay
- Repay a higher amount every month. You can do this by transferring an extra monthly amount yourself or through an automatic transfer. You can also ask the bank to debit a higher percentage from your account each month
Repay or transfer ongoing credit
The interest rates that banks charge for a revolving credit are far apart. Comparing the revolving credit before you take out one can already be a considerable saving. Pay attention here whether the term life insurance is already included in the interest, or whether you still have to take out this separately.
Do you already have a revolving credit and you discover that other banks charge a lower interest rate? Then it can be advantageous to transfer this revolving credit to a cheaper bank. The interest rates can differ by 3 percent, which can result in savings of hundreds of euros. Transferring a revolving credit, just like paying off the credit, costs nothing.
according to agreement
How does the repayment of a revolving credit normally work? Every month, the bank deducts a fixed percentage of the outstanding loan from your contra account. Usually this is 2 percent, but it can be slightly more or less. This monthly debit consists partly of repayment and partly of interest. Because you pay the same percentage every month, but the outstanding loan can change due to, for example, a withdrawal, the actual amount you pay differs per month.
The revolving credit interest can also rise or fall during the term. This is in contrast to, for example, the personal loan , for which banks charge a fixed interest. With a variable interest rate you do not know exactly how long you will pay off. If the interest rate rises, you will take longer to pay off. Your monthly amount then consists for a larger part of interest instead of repayment. If the interest rate falls, the repayment is shorter.