Everyone has their strengths and weaknesses in dealing with money. Some may not have any change left that already pay a round to friends, while others know that money in the account is synonymous with the account or unpaid debt. Whatever your case, you have certainly been tempted to borrow from your bank. Well, today we come to talk about one that is within your reach: the pre-approved credit.Yes, speaking “credit” always makes some people tense. But in some contexts, that extra money, coming very quickly into your account, can save lives. You just have to understand how it works.
How does the pre-approved credit work?
Quite simply, this is a loan that a bank account holder can take at any time. No analysis, paperwork, waste of time. Looks like a lot like overdraft, doesn’t it? But the difference is that it is not automatically requested whenever your account falls into the negative. You need to go to the ATM and ask for the credit.
Of course, like any debt, you will have to pay on time, with adjustments and interest. But, as the value is determined by the bank according to an analysis already made, it is a little more likely that you will be able to afford it. Terms, interest, and other costs vary from bank to bank.
What are the advantages of this credit?
This loan is quick, just go to the ATM. It is not a unique feature of the pre-approved credit, but it is still valid. If you are already anticipating that you will need extra money in the coming days, or want a fast loan to make a purchase, then this may be a good option.
If the idea is to anticipate a debt, such as overdraft, you may benefit. The interest rate ceiling is lower since the risk the bank runs is usually lower, especially if you already have stable income and are a good lender.
And the disadvantages?
Of course, not everything is advantageous in the pre-approved credit. One of the main problems you will have here is the impossibility of negotiating debt and interest beforehand. Since money comes out so fast, the built-in interest rate is not negotiated, only effected. So before you push, check the date and make sure you can afford the final cost.
And of course, the pre-approved credit will never save you from financial indiscipline. Even if your relationship with the bank is quiet so far, everything can change if you do not plan how to pay a debt. In the end, you will be in the same situation that you would be if you started using the credit card wildly. Doing a quick study of your finances can and will save you a lot of headache.
Now you have a better notion than pre-approved credit and how to use it responsibly. Want to keep up with our news and tips? Sign up for our newsletter and receive our best content first hand!