A line of credit is a product offered by banks and some businesses; that represent a sign of trust towards the client. They have a number of interesting advantages, and having one can come in handy at any time. Let's know what a line of credit is and what it is for and how you can take advantage of its advantages.
What is a line of credit
It is nothing more than a variable amount of money that the bank or business makes available to us so that it can be used at any time. It is a reserve money that does not accrue interest if it is not used. To clearly understand the concept of line of credit; we can think of it as an economic cushion for times when we do not have liquidity.
Not only banks offer their customers a line of credit. Since businesses generally also put them at the service of their customers, especially on special dates such as Christmas . Thanks to them, it is possible to meet the expenses of these days and pay them later as best suits.
Because it's interesting?
In the first place, because they represent a sign of trust towards customers. Some banks wait a reasonable time to grant it. If they appreciate that there is adequate income and the credit history is correct, they do not hesitate to make that money available to clients.
On the other hand, it is a liquidity reserve that makes us breathe easier. And when you have no choice but to get hold of it, the interest is usually lower than that of a credit card. As we pay the fees, the balance is replenished. And when we pay off the debt completely, the line of credit is available in full again.
In the case of shops, their operation is the same; With the exception that there are lines of credit for those moments like Christmas, which expire after that period has elapsed. And others that we have at our disposal permanently.
Make use of a line of credit
Although at first glance a line of credit may be nothing more than a loan, its usefulness is more than proven . For example, a self-employed person who has to face quarterly taxes or payroll payments from his employees. You can make use of that money at a lower cost than a loan. And, above all, with the advantage of immediacy.
For families, the lines of credit from shops and department stores allow them to pay for purchases very comfortably . It can also be used to pay for household appliances or products. A way to make our portfolio relax in difficult moments.
If you found the concept of credit line interesting . You can ask your bank for it, as well as in your shops. In these turbulent times for the economy, a line of credit is a great solution that adapts to your pocket.