The revolving credit is a relatively new form of credit.
It was introduced in the sixties of the 20th century. It is a lucrative form of credit for banks. Consumers can borrow money at variable interest rates, always with a certain maximum credit at their disposal.
In the 1960s, Dutch citizens lost their fear of borrowing. But it was mainly the commercial institutions that benefited. They gradually took over most of the market. New banking products, such as the salary account, the personal loan and the revolving credit were introduced ( source ).
The interest that consumers have to pay for a revolving credit is often considerably higher than the interest that one pays for, for example, a mortgage or a personal loan. The large banks in particular are inclined to demand a high interest rate for a revolving credit.
Not everyone always repays the revolving credit. In fact, many people are used to living in this way: always with credit in hand. Instead of saving, they live the entire life thanks to the revolving credit. This is not a problem for banks, because it provides them with a lot of money.
The revolving credit is the main source of income for banks since the majority of borrowers never fully repay the revolving credit. Borrowers continue to pay because the possibility exists to return borrowing of the repaid money. Due to the interest on the remaining amount, a revolving credit often costs borrowers a multiple of the original loan amount (source).
There are many forms of revolving credit.
The history is actually not very clear either. It is not easy to determine when the revolving credit product was first marketed in the Netherlands.
Standing in red and having a credit card is basically a form of a revolving credit, namely, but is seen as separate product forms of borrowing money and providing credit. For red standing and credit card accounts, much higher interest is usually charged. Especially if you compare this with the interest of a revolving credit.
In addition to banks, there are other lenders where you can go for a revolving credit. Usually this is a lot cheaper than at one of the established banks. This way you can even take out a revolving credit through the Credival.
Cheapest revolving credit
Many people simply take out the first continuous credit, but if you look a little further and compare the providers, you can save many thousands of euros on an annual basis. It is mainly the large banks that charge high interest rates for a revolving credit, while newcomers or other lenders can be much cheaper.