With a large number of letters of credit, you have the possibility to regularize your balance by installments. An opportunity that can be useful to you. However, pay attention to the interest rate: it can go up to 15%. With a large number of letters of credit, you have the possibility to regularize your balance by installments. An opportunity that can be useful to you. However, pay attention to the interest rate: it can go up to 15%.
Some institutions give you the possibility to regularize the balance of your letter of credit in several installments. A practical opportunity, but one that greatly increases long-term expenses. This fact is due to the interest rates applied to this practice, called “échelonné payment”. These interest rates generally vary between 9.5% and 15%, that is, the maximum limit authorized by the federal law of the credit of consolidation.
When you want to obtain a letter of credit from a bank
He will explain to you that the letter is more advantageous and that it is the “ideal partner in hotels, restaurants and shops, worldwide”. That the letter offers you many other advantages. Among others, the bank proposes, to make the letter even more attractive, a discount on costs in the first year. Recently, Wiseborrow Finance launched a letter of credit with virtually no expense. But this advertising assumes that people who have this letter of credit will be able to pay their balance at the end of the month. Unfortunately, this is not always the case. That is why banks ask to sign a contract to obtain the letter with the credit option.It is only by reading the general conditions written in small print that these details are ideally presented by banks,
Do you find them practical, the letters of credit? They have some advantages, but one who does not pay his entire balance by the requested date.
It has to be admitted that letters of credit are useful
First of all, they allow you to make purchases everywhere up to an established limit. They facilitate internet shopping and car rental. The advantages are sometimes associated. In the case of theft, consumer liability is limited. And if we pay the entire balance each month, we don’t pay a penny of interest. But they also have a drawback and are heavy: everyone who does not pay the balance every month, or who raise money by making a advance of funds on their letter of credit, they are expensive, very expensive.
Regarding the interest rate
First of all, it is the interest rate of letters of credit that cause problems. Up to the time of writing this document it was up to 15%. It is huge.
Illusion of discounts
Do you believe that cards with a reduced rate is a good solution? This is possible if you have an unpayable balance that you are unable to repay in the coming months. To assess your situation, taking into account the balance you have to pay, the time it takes you to fully repay, and the costs to pay for obtaining this type of letter. Do you want to benefit from a new letter where the launch interest rate is higher? Check how long you will benefit from this reduced rate, and ask yourself what will happen if the deadline is exceeded. Also ask yourself if having this card in hand does not make you spend even more money.
The hidden “surprises”
Before the Holidays, possibly the company that issued your letter of credit to you proposed to make the minimum payment. Secalhar also proposed to increase your credit limit, to allow you to buy everything you try or almost. This is about “bad hidden surprises”.
Don’t forget: you will be asked for interest expenses on payments that you do not make. And if you spend more than your means, don’t think to repay your entire balance in January. Finally, it is not you who benefit, but the company that issues your letter of credit, putting the interest into your pocket.
A major lack of information
Are the consumers occurring from all of this? According to a survey, consumers are strongly misinformed, as four out of ten people with a letter of credit do not know the interest tax they pay. The results of a study carried out in 2004 with young people between 18 and 29 years old have practically the same results. And 42.6% of people who don’t know how to pay interest are also unaware that when raising money with the letter of credit, interest starts from the day of the withdrawal.
It must be admitted that, after all, only financial institutions and companies benefit from the use of letters of credit by consumers. The values are really surprising. This illustrates why consumer associations are calling people to attention and being cautious when using their letter of credit.
Purchase of letters of credit
Therefore, we recommend that you purchase your letters of credit as soon as possible through a loan where you pay less interest rate!