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Personal loans revolving credit line

Hard work and a great deal of financial discipline surely pay off, but you can’t rely on these to provide for your emergency needs all the time. It’s a good thing that most banks in the Philippines offer a revolving credit line as an alternative to the common loan called “fixed-term.” 

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Types of personal loans

Eligible individuals can borrow money in two ways: closed-end credit and open-end credit.

Closed-end credit

As opposed to the revolving credit line, fixed-term loans are considered closed-end credit since there is a set period when your principal loan plus the interest should be paid in full. In this type of loan, the borrower and the bank have an agreement on the amount of money to borrow, the period you have to pay your loan back, and the interest rate that will be charged on the loan.

Open-end credit

Also called revolving credit line, this type of loan doesn’t have fixed payment period; it is, rather, ongoing.

Your revolving credit line is like a credit card with a maximum amount of money that you can loan at any given time. After you pay your first month, you can borrow the money again. It revolves.

Understanding Revolving Credit in Personal Loans

With a revolving credit line, you can use the money up to the agreed limit, and the moment you repay the amount you owed or even a portion of it, the amount becomes available again for you to use. Here are its share of pros and cons for you to better understand what you are getting into:

Pros

With a revolving credit line, you will not be obliged to pay for a fixed monthly amortization. Instead, you have various payment options every month. You can choose to pay the full amount you owed immediately, or you can pay just the minimum amount due. Alternatively, you can choose to pay just a portion of the amount you borrowed. Another advantage of the revolving credit line is that it is easily available, so you can use the money whenever you need it. Your revolving credit line can literally save your or your loved one’s life especially if you used it for medical emergencies.

Cons

Depending on the bank and your credit history, you may be given low revolving credit line or limit, which means, the amount that you can owe may not be enough for your intended purpose. There can also be instances when the interest rates on revolving loans are higher than the interest charged on fixed-term loans. In addition, a revolving credit line is not a good option if you want to have recurring debt. People easily spend because they know the money is there replenishing after each payment is made.

Personal Loans with revolving credit in the Philippines

In the country, among the personal loans with revolving credit line that you can consider are PSBank Flexi Personal Loan with Prime Rebate, MayBank Philippines with Revolving Credit Line, CTBC Bank SME Business Loan, and Philippine Postal Savings Bank Revolving Credit Line.

Though most revolving loans are easier to obtain, you have to think about your decision many times over. Find the best revolving credit line available using GoBear’s smart tool.

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