Before we jump into the title term, we need to clear up some pre-requisites such as the concept of revolving credit first. When it comes to typical finance such as personal loans, you have a set amount of credit which when exhausted, you need to apply again for more credit. Although not referred to as ‘inflexible credit’, in theory, personal loans are. This article will clear up some definitions of these various and related terms.
What is Revolving Credit?
Revolving credit is finance that is constantly replenished as you pay it off. Your credit limit acts as your ‘loan amount’.
Comparison of Revolving vs Non-Revolving
Revolving: Credit Card
- Your credit limit is $10,000. You spend $2000 every month for 5 months.
- On the 5th month, you repay $8000. You now have $8000 of available credit to spend again (not taking into account minimum repayments/monthly fees).
Non-Revolving: Personal Loan:
- Your loan amount is $10,000. You pay off $2000 every month for 5 months.
- After 5 months, your loan term has come to an end. If you wish for more credit from a loan, you’ll need to apply again.
Are there any personal loans that feature ‘revolving credit’?
Yes. While not a true personal loan, Citibank’s ‘Personal Credit’ and ‘ReadyCredit’ act as hybrids of credit cards and personal loans. These hybrids are referred to as ‘flexible lines of credit’. Like a loan, you can choose the amount of credit landed to you (subject to approval).
- These ‘flexible lines of credit’ offer the debt consolidation aspects and opportunities of personal loans. They are referred to as flexible as they have revolving credit as opposed to a fixed loan amount.
- You will save significantly by keeping revolving credit accounts open as opposed to re-applying for loans. Loans often comes with hefty application fees, or a set % of the loan amount as a fee. These ‘flexible lines of credit’ and any credit card in general comes with no application fee whatsoever.
What are some advantages of these ‘Flexible Lines of Credit’?
- Citibank Personal Credit offers 14.5% p.a. on purchases. It has completely replaced Citibank Personal Loans due to its rising popularity for those in need of either the function ability of a credit card or a loan. Temporarily unavailable.
- Citibank ‘ReadyCredit’ offers 19.99% p.a. on purchases, and 7.9% p.a. for 24 months on balance transfers. It also features no annual, transaction, ATM or withdrawal fees ever from any Citibank or Westpac ATM, making it an incredible emergency line of credit to keep laying around.