A credit limit what exactly is that?
When you take out a personal loan, you know exactly what you have. However, with a revolving credit this can be considerably different. This offers many advantages. You can act very flexibly. Banks also participate in this. For example, there are many options for changing things to the terms of your revolving credit in the meantime. Consider, for example, increasing or decreasing your credit limit. This allows you to ensure that you have more leeway, or to ensure that your repayment amount is lower because your limit goes down. This is very easy to care for.
Increasing the limit
When your life changes, this often also relates to your financial situation. To handle this properly, it is wise to think about the limit that you have given to your personal credit. When you were in your twenties, a limit of 5,000 euros might be more than enough. But in your forties with a mortgage, a family and a household, it may well be that you need it five or ten times. In such cases you can choose to increase the limit. The bank naturally also plays a role in this.
A temporary solution
Increasing the credit limit can also be a temporary measure. Sometimes you immediately need a lot of money. Consider, for example, damage to the roof of your home due to storms. As long as the insurance does not cover, or may not do this at all, you will have to think of something else. Such repairs can quickly become expensive. In that case, instead of taking out a second loan, you can also opt for an increase in your credit limit. When you then start paying, you can adjust it down again when you are back on schedule.
Are in red
Actually, a revolving credit is nothing other than what people always called ‘red’. You can get more money from your bank account than you have on it up to a certain maximum. A rule for this that banks apply is that you must be 18 years or older. Only if you are an adult can you make a well-considered decision. This is even more so because increasing the limit nowadays is very easy to arrange online. So there is almost no personal contact anymore. This means that the control also comes more to yourself. Some banks still call this red.
Decrease the limit
You can also choose to lower the limit correctly. Not only after you have raised it first, but also from the amount that you once agreed as a starting point. Perhaps, for example, you started earning more in the meantime. Then you also have a good chance that you will need to use your credit less. In that case it is a good idea to slightly lower the limit. Among other things, because when you do borrow something, you pay a lower repayment amount and a lower interest rate when you start repaying.