Managing personal finances efficiently often requires flexibility. That’s where revolving credit comes in — a loan system that allows you to borrow, repay, and borrow again, all within a fixed credit limit.
With Vizzve Finance, you can understand and compare different credit types to make informed borrowing decisions that fit your lifestyle.
What Is Revolving Credit?
Revolving credit is a flexible borrowing facility that lets you withdraw money up to a certain limit, repay it (partly or fully), and then use it again.
Think of it like a credit card or an overdraft account — you can keep using the available balance as long as you make timely repayments.
Unlike a traditional loan, where you borrow a lump sum once, revolving credit gives ongoing access to funds whenever needed.
How Revolving Credit Works
Let’s say you have a ₹1,00,000 revolving credit limit.
You borrow ₹50,000 and repay ₹25,000 — now ₹75,000 is available again.
You can continue using the funds as long as you stay within the credit limit and make repayments on time.
Interest is charged only on the amount used, not the entire limit.
Key Features of Revolving Credit
| Feature | Description |
|---|---|
| Credit Limit | Pre-approved amount you can borrow repeatedly. |
| Interest Calculation | Charged only on the amount used. |
| Repayment Flexibility | Repay in full or minimum amount and borrow again. |
| No Fixed Tenure | Credit remains active until canceled. |
| Reusability | Once repaid, funds become available again. |
Revolving Credit vs Term Loan
| Aspect | Revolving Credit | Term Loan |
|---|---|---|
| Borrowing Type | Reusable credit limit | One-time disbursal |
| Interest Charges | Only on used amount | On full amount |
| Repayment | Flexible | Fixed EMIs |
| Tenure | Ongoing | Fixed duration |
| Example | Credit card, overdraft | Personal loan, car loan |
Types of Revolving Credit in India
Credit Cards – The most common type; offers credit limit for purchases and payments.
Personal Line of Credit – Flexible borrowing facility offered by banks/NBFCs.
Overdraft Account – Linked to savings or current accounts, allowing withdrawal beyond balance.
Benefits of Revolving Credit
✅ Flexibility: Use funds anytime without reapplying for a new loan.
✅ Pay Interest Only on Usage: Saves money if you don’t use the full limit.
✅ Improves Credit Score: Consistent repayments build a positive credit history.
✅ Emergency Support: Ideal for unpredictable expenses like medical or repair costs.
Drawbacks to Watch Out For
❌ Higher Interest Rates: Usually higher than term loans.
❌ Overspending Risk: Easy access to funds can lead to debt traps.
❌ Impact on Credit Score: Delayed payments hurt credit ratings.
Eligibility to Get Revolving Credit
| Criteria | Requirement |
|---|---|
| Age | 21–60 years |
| Employment Type | Salaried / Self-employed |
| Minimum Income | ₹15,000 per month (varies by lender) |
| Credit Score | 650+ preferred |
| Bank Account | Must be active and verified |
How Vizzve Finance Helps
Vizzve Finance simplifies borrowing by helping you:
Compare revolving credit and personal loan options from multiple lenders.
Understand interest rates, charges, and benefits.
Apply online and get instant eligibility checks.
💡 Vizzve Tip: Use revolving credit for short-term cash flow needs, and a personal loan for larger, planned expenses.
Conclusion:
Revolving credit offers a smart and flexible way to manage short-term financial needs.
Whether it’s credit cards or overdraft facilities, using them responsibly can improve your credit score and financial confidence.
With Vizzve Finance, you can explore both revolving credit and personal loan options to find what best suits your goals.
💳 Vizzve Finance — Smart Borrowing for Smarter Living.
FAQs
1. Is revolving credit better than a personal loan?
It depends. Revolving credit is flexible, while a personal loan is ideal for fixed, one-time needs.
2. Does revolving credit affect my credit score?
Yes. Timely repayments improve it; missed payments lower it.
3. What’s an example of revolving credit?
Credit cards, overdraft facilities, and personal credit lines.
4. Can I convert revolving credit into a term loan?
Some lenders offer that option, depending on your repayment history.
Published on : 3rd November
Published by : SMITA
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