Online credit is nothing more than a feature that some credit cards have so that their cardholders can access an extra amount to their monthly ceiling and can be used for urgent situations when this limit is already exhausted. But one question remains: is it a better option as an alternative to other financing solutions? What are the costs of online credit? See if it pays off.
To have access to online credit, first of all, you need to have a credit card. This financial product can give you access to a number of advantages, such as airline miles, points, discounts and even the return of a percentage of the value of your purchases – so-called cashback.
How to get credit online?
This is one way to get an extra amount on your credit card ceiling.
The ceiling is a maximum credit limit that is made available monthly to the cardholder and is agreed in advance between the cardholder and the bank. However, sometimes the consumer may need more money than the ceiling and may apply for an online credit.
However, you need to pay attention to some important aspects so that you are not over-indebted.
In online credit, the amount you request from your credit card issuing financial institution is transferred to your current account so that it can be used immediately.
However, its name implies, online credit is treated as a loan and therefore has an associated interest rate, which may or may not be that of your credit card. Note that the higher the underlying interest rate, the higher the amount of interest to be repaid, and consequently the higher the total amount charged to the consumer (MTIC).
As a rule, online credit is an indefinite contract – but it may have a maximum financing term, depending on the financial institution – in which the customer uses the amount as required.
This extra is repaid by monthly installments for a period previously agreed between the customer and the financial institution, as with any other credit. The minimum amount to be settled monthly is the interest cost.
However, it should be noted that if you need a large amount of funding you should opt for a personal loan, which may most certainly have more attractive interest rates, depending on the purpose in question, or even other associated advantages – such as the lack of credit. capital. We suggest that you compare the entire market offer beforehand.
What is the offer of online credit cards?
There are five institutions that have online credit cards. This is considered a benefit of the card as it is an extra to the ceiling that the customer has available on their card to use on credit.
Be aware of the ease of this credit.
Online credit, however, has its disadvantages. Because it is fast and easy – just by contacting the financial institution for the amount requested in your current account – may be tempted to ask several times an additional credit line after exhausting the credit limit on your credit card.
It is important to weigh the pros and cons, and the main disadvantage lies in the associated interest rate: this may be higher and therefore the cost of your credit will increase.
Imagine that you have a credit card with a 15% APR and that, after you have exhausted your ceiling, you request an online credit of 2,000 dollars. This means you will pay 300 dollars interest and your MTIC will be 2,300 dollars.
Basically, online credit is a cash loan, as with all other credits, so it should not be taken lightly. Always use it (and only) in an emergency. We also suggest the establishment of an emergency fund to guard against situations of greater need for financial liquidity, thus avoiding paying interest associated with online credit.