Interest Rates and Terms for Revolving Lines of Credit
They offer the freedom to spend freely when needed and repay according to convenience within the stipulated time. There are several other advantages to these funding sources, as discussed below.
When you sign a loan contract, you agree to the terms set by the bank. These are fixed and will not change. Credit cards, on the other hand, work differently. The terms and conditions agreed upon may change. This includes the interest rate. Note that these could change at any time without any notice. Even though you do not agree to the new terms, you are legally obliged to follow the rules as long as you are using the card. The only option to stop following the terms is to cancel the card and make the complete payment.
Interest rates on a credit card are designed in such a way that they start out low in order to promote initial spending. Once the customers are used to their routine, the interest rates start increasing slowly. The minimum amount that seemed low at the beginning starts to get higher and higher. If you miss one round of payments, you end up having to spend a lot more on the next payment. This is why it bears making sure you understand all the conditions before opting for a revolving balance credit line.