Sometimes you need a solution that is a little faster and more flexible than a regular loan. Then you can try to get an account credit (or online credit with another name). It is a current credit where you can easily use any amount up to the maximum limit of the credit and then only pay for exactly the money you use.
Withdraw money from the credit
In many ways, an account credit is the same as having a regular credit card except that you have no card with which you pay things. Instead, you withdraw money from the credit and deposit it into your own account if needed.
The benefits of having a credit instead of taking a regular loan when you need a cash deposit are several. First, it is faster and smoother once you have the credit up and running. You should apply for a loan, wait for answers, sign up and get the money paid out. If you have a credit that is already approved and running, you can simply make a withdrawal when you need it and then you have the money the same day or the next.
Secondly, you have the advantage of paying for just the money you spend. It is not always easy to know exactly how much money you need and when you take out a loan you often have to take in a little extra to have margins. With an account credit you are free to use as much or as little money as you want within the limit of what you have applied for.
This means that you can withdraw just as much money as you need and then you only pay interest on the exact amount and time you use them. As soon as you are done and can afford to repay the credit, you do not have to pay interest and again you have the opportunity to make full use of it.
This is how an account credit works
It is a fairly simple arrangement of an account credit since it is basically the same principles as for all credits. You start by applying for a credit for a certain amount. The higher the amount, the tougher the demands on you and your finances can be. Maybe you apply for USD 10,000 or USD 20,000 depending on what you feel you need.
Once you have been approved, you have a current credit ready to be used if needed (if you are not approved for the amount you applied for, you may be eligible for a lower amount). You can use your entire credit amount at once if you wish, but you can also use less. Most lenders offer you to choose your own down to the hundred kronor level.
When you do not use the credit, you pay no interest at all. You just have to pay exactly for the time you spend the credit and borrow the money. Each month, you receive an invoice where you are offered either to pay off the entire credit plus the interest or to pay the amount you have borrowed.
In principle, all lenders have a minimum amount to be paid, which is either in USD (eg USD 500) or as a percentage (eg 10% of the debt). Sometimes they have both and, which usually means that according to this example you have to pay at least 10% but if this percentage is longer than USD 500 then you have to pay this minimum amount instead.
If you choose to only pay off your debt, you will instead receive a kind of installment plan where you always have a minimum amount to pay each month. You can always pay more than the minimum amount and even if you want to repay everything. If you pay part, you should know that you are paid interest on the amount each month and this is usually quite expensive.
Very few account credits have some additional fees. Whether setup fees, notification fees or other. If you find a lender that has them, be careful and consider how much extra this will cost you.
To think about when it comes to account credit
Some things to keep in mind when considering getting an account credit. We list these below.
The entire credit can be paid out directly
By default, many lenders seem to be paying off the entire credit you applied for directly to your account. For example, if you want USD 20,000 in credit, they can then deposit this amount into your account when your application is granted.
Since the idea of a credit should be that you have it ready when you need it, you may not want to start using the credit from day one, but just have it ready when the need arises. Then you have to pay back the full amount immediately after you have received it. After that, you should have the credit ready while waiting for it.
There is a lot of difference between different lenders
Although there are quite a few players offering online credit or account credit today, it is actually not that they compete and push each other’s prices directly. It is rather that prices can differ very much and some are very expensive while others are more affordable.
You really have to take a look around and compare different credits with each other before making your choice, otherwise you risk choosing an unnecessarily expensive credit. Instead, take some time to compare interest rates and apply with a lender that feels good. You save a lot of money by looking around in advance and we offer, for example, a large comparison of account credit and online credit, which you can use for this purpose.
An account credit is not always the best option
The nice thing about an account credit is that you can use it only when you need it and just the amount you need. It can be more difficult to do the same with a loan. However, a regular loan can sometimes be better, especially if you know that you only need money on a single occasion and how much will be spent.
Usually a regular private loan is cheaper than an account credit and if you do not feel that you want a credit that is always there, you can instead borrow the money for a year, for example. Another option is to get a completely regular credit card, which can also be a good alternative to an account credit.
A credit card basically works in the same way only that you use the card directly to buy things. The advantage of credit cards is that you basically always have an interest-free period of 30-45 days as long as you pay back all the used credit on the next invoice. This does not have an account credit.
Advantages of account credit / online credit
Quick and easy to get the money right when you need them, once you have your credit fixed. Then you only make a withdrawal that comes the same day or the next.
Good to only have to pay interest just for the money you need to use and for the exact period you need them. When you do not really know how much is going on (for example, during a renovation) it is nice to have that flexibility.
As long as you have repaid your credit, you can always use it again. You can use the money within the credit line over and over as many times as you like after paying off your debt. If you have used some, you can always use the remaining amount when you feel it.
An account credit normally does not have any fees such as a setup fee or a management fee but only interest and then only on the exact money and for the time you use the credit. So no hidden fees.
Disadvantages of account credit / online credit
It is quite expensive interest on such a credit. It is more expensive than a regular private loan in most cases. You simply have to pay extra for the flexibility.
It’s easy to decide to only pay off your debt instead of settling it and then it will remain and interest rates tick. It may then be more expensive than originally thought.
As I said, an account credit may not always be the best solution. A loan or credit card may be better depending on your situation. The credit card is similar to the credit card in many ways and a credit card can also give a little bonus sometimes.