A lot of people are familiar with the equity line of credit or HELOC. And only a few really understand how the line of credit works. Most individuals, when they face financial predicaments, seeking a line of credit is usually the last thing that occurs to them. What usually comes to their mind is always about visiting the traditional bank for a traditional fixed or variable-rate loan, sometimes they end up asking for loans from family and friends, or other means of getting loans like pawn shops, payday lenders, or donation sites on the internet.
A lot of businesses have been using Credit lines for years now to meet their working capital needs or take advantage of strategic investment opportunities.
In today’s article, we’re going to discuss ONE FINANCE LINE OF CREDIT and how it works. But before we dive into that, let us look at some important things regarding a line of credit. We wrote a detailed article on One Finance. You can check it out to know more about the company.
Also Read: Access Bank DBA Lite or Trader Lite
What Is Credit Line and How It Works
A Credit Line is known as a personal line of credit that allows an individual to borrow money at any time until he exhausts his credit limit.
This line of credit is more of a flexible loan from a bank or any other financial institution. The line of credit is more similar to the everyday credit card that you know. It allows you to have a limited amount of funds that can be used whenever you need money.
The line of credit amount is defined and can be paid immediately or within a prespecified period. Its interest is charged immediately when the money is borrowed not like the normal traditional loan.
This loan interest is charged immediately after you have access to the money you borrowed. For you to fully borrow money, you must be approved by the bank, with such approval from the bank as a byproduct of the borrower’s credit rating and/or relationship with the bank. The interest rate of a Line of Credit is usually variable, this is one of the reasons why it is usually difficult to predict how much money you can actually borrow and how much it will cost.
The Line of Credit tends to be lower-risk revenue relative to credit card loans but they do complicate a bank’s earning asset management somewhat, as the outstanding balances can’t really be controlled once the line of credit has been approved.
How One Account Line Of Credit Works
One Account allows you to use your available credit and pay back interest on the amount you use.
With One Finance Credit Line, you have a monthly grace period after you use your credit before interest is owed. Therefore, you will have up to the bill due date to repay the credit owed or a portion. After that date has passed, you will owe interest at 1% per month, or 12% APR, on the outstanding balance.
On the bill due date, your payment is due and includes interest accrued during the month.
Overdraft and Credit Line On One Finance
What Is One Finance Overdraft
With your one finance account, you will have access to a low-cost, flexible credit through overdraft which is absolutely free.
How The One Finance Overdraft Works
- To get access to the overdraft, you’ll need to fund your ONE account with a minimum deposit of 20$.
- Overdraft connects to your Spend Pocket to cover your purchases that take your balance 0$.
- If your balance is carried into the next month, the bank will charge you 1% interest a month, and 12% APR.
- As a user of One account, you can add a paycheck direct deposit to your account to be eligible for an increased overdraft limit with time.
- This overdraft can be enabled and disabled directly on your spend pocket.