The end-of-year period is not only a busy but also an expensive period for many people. Even if you do not go on holiday, there are often gifts, parties and annual bills that have to be paid. Just think of due dates for insurance policies (for tax reasons), for example. If you do not have the required savings, you should open a credit or cash reserve. Always handy to spread costs.
What is a credit gap?
You will find a money reserve under many names: a credit opening, a revolving credit, a credit line, … They all indicate that it is a credit that is unlimited in time and can be withdrawn again as soon as a capital part has been repaid. In this way you always have cash.
Characteristics of a money reserve
It is very characteristic that a variable interest rate is always used for a money reserve . This is determined once a month. This is because with a revolving credit there is no fixed end date: you can always withdraw money up to the permitted credit limit. The credit line is usually between 1,250 euros and 10,000 euros.
The most important features are:
- There is no fixed term. In principle, a money reserve has no final maturity.
- There are no (or small) fixed repayments. The withdrawn amount must be repaid according to a certain time (legally determined at 1 or 5 years). Amounts up to 3,000 euros must be legally reimbursed annually according to the principle of the zero-term period. This is 5 years for higher amounts. When the reimbursement has taken place, you can use the money reserve again and a new zero date is set. This also means that costs can never be charged for an early repayment.
- You always have money available as long as the limit is not reached. You decide yourself when you record it.
- The interest is calculated monthly and must of course be repaid.
Different types of money reserve
A credit line is therefore a flexible credit form, especially suitable for unforeseen expenses of which you do not know the total amount in advance.
Most money reserves will be linked to a current account. However, it is increasingly happening that credit openings are also offered with a money reserve via a credit card such as VISA or MasterCard (not for prepaid payment cards). And as you have undoubtedly already noticed, this is not only done by the classic banks. More and more stores also offer credit cards. The credit can then be used for purchases within the store chain. Mediamarkt and Carrefour are just a few examples of this. Attention: always read the conditions carefully and check out the Annual Cost Percentage (APR).
Request a money reserve
Before you can dispose of the credit an application must be submitted. This in itself is not very different compared to other loans. An application can also easily be online nowadays. Almost all lenders have a simulation tool on the internet. It also saves you a lot of time and the conditions are stronger than for example with a home loan.
You indicate the amount of credit you want to use and the lender looks at your options and checks your details with the National Bank. Once approved, the credit is credited to your current account. Or, as mentioned before, linked to your credit card.