Why more and more banks are discontinuing Revolving Credit
From 2020, revolving loans will be significantly overhauled. Our partner bank Interbank will stop all revolving credits as of 1 May 2020 . Other banks / lenders (ABN AMRO, Nationale Nederlanden, Defam , Qander , ING, Rabobank and Freo) will also discourage, phase out, stop / cancel or block this form of borrowing in the coming years. BNP Paribas has always only offered personal loans in the Netherlands, never revolving loans.
The reason for the discontinuation is threefold:
- As of 1 January 2020, the VFN (Association of Financing Companies in the Netherlands) has tightened the borrowing standards for households in its VFN code of conduct . The new calculation takes into account, among other things, higher costs of living. Banks must take even more care of an adequate connection between the spending target and the credit product, with the aim of protecting consumers against over-lending and unnecessary financial risks.
- Many banks did not have this duty of care in order. Duty of care with a revolving credit means that the bank / lender must have a good idea of the customer's financial strength: does a revolving credit still match the income and personal situation of the customer? What does the customer's financial 'photo' look like when the variable revolving credit interest rate rises or when the customer wants to withdraw money he / she has repaid? Lenders must therefore, as it were, make a 'film' during the term and the use of a revolving credit. Many banks are currently not keeping a finger on the pulse, with the result that many consumers are weighed down by irresponsible revolving credit.
- Many people do not know that there are cheaper types of loan, such as a personal loan. They still run financial risks with a revolving credit / loan with a limit / credit facility with high interest, while this is no longer necessary. Transferring or merging (different) expensive loans to one clear personal loan with a low interest rate is much cheaper.
Why is revolving credit no longer of this time?
From 1 May, it will no longer be possible, as indicated above, to make withdrawals from a revolving credit via Interbank . The revolving credit is converted into a revolving credit with a variable interest and Interbank no longer offers any new revolving credit.
What are the characteristics of a revolving credit?
- Extra spending limit up to a certain limit: amounts withdrawn can be withdrawn again after redemption
- Variable interest
- Monthly payments of the amount withdrawn, including interest
A revolving credit therefore offers flexibility. But the downside is that interest rates can fluctuate considerably. Moreover, the end of the loan is not quickly in sight, because amounts can be withdrawn again and again. Revolving credit creates a lot of financial uncertainty and is therefore no longer in keeping with these times of already insecure / flexible employment contracts, limited mortgages and stricter borrowing standards.
Some banks are blocking their revolving credits. This is unnecessarily expensive and also inconvenient for consumers. After all, customers are used to a certain extra spending limit. But what if a purchase is required when there is no more money available from the revolving credit? Customers with a blocked credit can no longer withdraw money from their credit, but they do pay the higher flexible interest rate.
This variable revolving credit interest is always higher (from 4.5%) than the fixed low personal loan interest (from 3.9%). The fixed interest rate for personal loans is now even historically low. All things considered, you are a thief of your own wallet if you do not transfer now, but take the risk that interest rates will rise again.
The bottom line: why not - at a time when the interest for personal loans is historically low - take out a personal loan with a fixed low interest rate?
Personal loan: why is it in this time?
A personal loan has the following properties:
- In one go an agreed amount on your account
- A historically low interest rate from 3.9%, which is fixed for the entire term (usually about 10 years). You therefore know exactly where you stand.
- Interim withdrawals are not possible. In other words: you repay immediately and know exactly when you will be debt-free again.
- Additional interim repayments are always possible and are free of penalty.
This type of credit gives consumers much more overview, clarity, a lower interest rate and the certainty of a fixed low interest rate.
Moreover, when taking out a personal loan, there is no need to make a 'film' of the customer's financial situation. A 'photo' at the time of closing is sufficient. That's because a personal loan is phased out right from the start of its term and no interim amounts can be withdrawn. The debt is therefore at most when closing, so one 'photo' is sufficient.
It is not without reason that we have seen a decline in continuous credit applications for years at Snaploan Online. More than 95% of our customers opt for a personal loan.
Switch expensive loans to one clear personal loan
Has your credit been canceled, do you have to reduce your credit or is your loan blocked? Are you considering transferring your current expensive revolving credit free of charge ? Or to have different loans merged into one clear personal loan with much better conditions and security?
Then it is certainly worthwhile to see whether a personal loan can help you further and whether it suits your current financial situation and plans.
Request a no-obligation quote here .