What is a credit? Credit concept
The credit is a financial operation in which a money quantity is put at our disposal up to a stated limit and during a certain period of time.
In a credit we administer this money ourselves by means of the disposition or retreat of the money and the revenue or return of the same one, attending on our needs in every moment. This way we can cancel a part or the totality of the debt when we believe suitably, with the consequent deduction in the interests payment.
Also, for us being allowed to have this money we must pay to the financial institution a few commissions, as well as a few interests in accordance with a few agreed conditions. In a credit only interests are paid on the used capital, rest of money is at our disposal but without for it we having to pay interests. Come the term of the expiration of the credit we can negotiate his renewal or enlargement again.
The intention of the credit is to cover the expenses, current or extraordinary, in punctual moments of absence of liquidity. The credit bears normally the opening of a checking account. Two types of credit differ: credit accounts and credit cards.
It is quite common to use the terms “credit“ and “loan“ as if there were the same, but the true thing is that there are enough the differences between credit and loan.