What is revolving credit?

Short on funds to pay a bill? Is there an emergency purchase you need to make? Do you need extra cash to pay for your car or home repair? Don’t worry! Revolving credit can help fulfill your needs. But before rushing to apply for one, you must first understand what exactly is revolving credit and how it works. 

A revolving credit is a kind of credit line issued by banks that allow account holders to borrow money repeatedly up to the maximum amount they are approved for. When you use your credit line, you don’t have to immediately pay the amount you borrowed in full. Instead, you can opt to pay a portion of your current balance due in regular payments. Each payment, minus the interest and fees charged, replenishes the amount or principal available to you. If you do not use your credit line, you will not be charged with any additional interest or fees.  

How does it work?

For example, you have a credit limit of PHP 20,000 and used PHP 3,000 to pay for an emergency car repair. You can still use the remaining PHP 17,000 for other things. You can either pay your used credit in full or opt to pay a portion of it on your due date. Your credit limit will be replenished to the full amount of PHP 20,000 once you have completely settled the credit you used.

What are the pros and cons of a revolving credit?

1. PRO: You can be ready for any emergency

Having revolving credit gives you access to funds whenever you need to. It’s perfect for emergency purchases or if you want to buy big ticket items but currently do not have enough money to pay in full.


2. CON: You can only use it up to a certain amount approved by the bank

Banks assign credit limits to each account holder depending on their credit score. The better the credit score, the higher chances of getting approved for a higher limit. This allows each revolving credit account holder only up to a certain amount to spend or borrow. Once you reach your credit limit, you will not be able to use it until you make partial or full payments that will replenish your credit line.


3.  PRO: It’s the fastest way to get extra cash

Depending on the bank where you have a credit line with, revolving credit can be converted to cash to a certain extent. This comes in handy if you have bills to settle or make payments that require you to pay in cash.


4. CON: Your credit score may be affected if you’re not responsible with your payments

Having a revolving credit line is a privilege because the bank trusts you enough to give you easy access to funds. Your responsibility is to pay your dues on time and consistently. Failing to settle your dues can lead to closing your credit line or even prevent you from opening up new ones.


5. PRO: It’s a useful financial tool

Apart from the convenience it brings, a revolving credit line helps diversify your credit mix. This plays a huge role in managing a good credit score. A diversified credit mix shows that you are capable of managing different kinds of credit that can help build a strong credit history. 

You can be ready for anything all thanks to CIMB Bank’s first all-in-one revolutionary product, REVI Credit! Get easy access to credit and financial flexibility right at your fingertips. If you’re an existing CIMB Bank customer, all you need to do is download the REVI Credit app and apply for a revolving credit line of up to PHP 250,000. You can use it to buy load and pay bills. You can even convert a portion of your approved credit line to cash or to a Term Loan! Buy now and pay later with our virtual card soon! All these with ZERO ANNUAL FEES!

Visit this link to learn how to apply for a REVI Credit line: 

Head over to this page to learn more about REVI Credit:

Learn more about credit score and how to maintain it in the link below: