Revolving Credit in the Damn Corner?

Fascinating step by Widecobank, the approach to revolving loans. In short, they will simply convert part of the loans into a personal loan and for new customers a maximum amount of € 15,000 and a repayment amount of 2% per month apply.

 

Mega expensive loans

Mega expensive loans

I think it’s pretty saying. It will be necessary to restore the name after a lot of hassle at Kassa and undoubtedly also interference from the Netherlands Authority for the Financial Markets (AFM). When I look at the credit comparison, Widebank is just a terribly expensive lender. The interest rates are just extremely high – why would you take out a loan there?

 

Caught in an expensive revolving credit

This primarily concerns existing customers. People who once took out a revolving credit, then noticed that the interest was very high and wanted to switch to another lender. That was only possible, for example because their income was not sufficient (lower than before or stricter rules). Then you are caught in the expensive revolving credit.

 

View of total repayment

Caught in an expensive revolving credit

Those people, for which their revolving credit is converted into a personal loan. Fixed interest, fixed term, repaid amounts can no longer be withdrawn, so the prospect of total repayment. Moreover, they also receive compensation for their ‘imprisonment’. Nicely. Or well … for a small personal loan, they still charge a much too high interest rate: 10.8% at the moment with a loan of € 5,000. At Lender & Spender that is already possible for 5.6%.

 

Discourage revolving credit

So far the existing customers. Then the new one: a revolving credit with Widebank can be a maximum of € 15,000 and the monthly installment becomes 2% of the limit. A clear discouragement policy for taking out a revolving credit. That could sometimes become commonplace, a little bit in line with banning the interest-only mortgage. I don’t think that is because banks want it so badly, but because politicians and regulators think that is important.

 

Helping towards a debt-free future

Helping towards a debt-free future

Widebank communicates it all with the motivation that it wants to ‘help its customers realize a debt-free future’. Sounds nice, but you are a bank, one that earns money by lending money, and then you start shouting that you prefer that people no longer borrow. As if the baker is going to say that he is going to help you with a low-carb diet. I don’t know. Still comes across as a charm offensive to make everyone – and especially the AFM – happy again.