What is current account credit?
A current account credit is actually just a more chic name for standing in your checking account. A current account is simply a current account with a credit facility. Everyone, both companies and individuals, can opt for a checking account on which you can be in the red.
Current account – Maximum borrowing
You close a current account with different banks and is always linked to your current account. The amount that you can stand in the minus (red) varies per bank and per person. This often depends on your income that is deposited into your checking account every month. The maximum amount that you can be in the red can be increased in consultation with the bank to sometimes as much as 50,000 USD.
Current account conditions
A number of requirements or conditions are often imposed on having and keeping a current account credit. In order to retain the possibility of reding your current account, for example, you must have a positive balance on your account at least once every three months. Do you want to increase the maximum amount for red? Then the bank wants to know a number of things, such as your income and type of employment.
Current account interest
A current account account usually has a fairly high borrowing rate. In addition, the interest rate for the loan is variable. This means that the current account interest rate can rise or fall during the red period. The current interest account is calculated by most banks per day. If you only have a red card for a few days, it is usually more attractive to opt for a current account credit than, for example, a personal loan. If you have been in the red for a number of days, the interest due will be automatically debited from your account each month.
Current account – The alternative
So when you are red a few times, there is not much going on. But are you in the red more often and longer? Then it is sometimes cheaper to take out a revolving credit. The interest on a revolving credit is usually lower than on a current account.
Pay attention! It is not smart to take out unnecessary loans. Borrowing money always costs money.
Current credit account – Advantages and disadvantages
One of the advantages of a current account credit is that you can borrow money quickly. In fact, you have no idea that there is a loan. But this is also a pitfall immediately. Another advantage is that you do not have to take out a separate financial product if you need some extra money. A current credit account also has a number of drawbacks. The most important thing is that the interest in structural red is often much higher compared to a revolving credit or a personal loan.
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