FNB Pre-approved revolving loan. How does it work?

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ChocolateBadger

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FNB have offered me a revolving loan for quite a large sum of money pre-approved. Quite interested in it as a 'nice to have' as I've proven to be quite a saint with my credit card.

Only question is how does it work? Do I have to use it? It's it just an account that sits with a pool of money that I can take and put back when I please like my credit card?
 
If it's the same one that my wife got, then it's a loan account linked to your account with 0 balance, Rxxxxx available and no monthly costs unless you use the money.
 
Out of curiosity, what interest rate did you get? I have a Standard Bank revolving loan that I got five years ago for only 15%, but when I applied again now FNB offered me 22% (which I turned down). The consultant told me that's pretty standard for what they're offering to a lot of people now.
 
Dan C said:
Bad idea to get one. You will forever be in debt.
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This is also true lol. I finally paid off my Standard Bank one after having it for five years. It was only R25 000 and I was paying a comfortable R575/month, and even withdrew like R4 000 extra at one point from it. This week just used some of my bonus to pay off the remaining R13 000 on it, freedom at last! I was kinda shocked when I worked out that I'd ended up paying R34 000 for around R29 000 worth of debt: it just makes you realise the power of saving vs having ones money continually eroded.
 
Foxhound5366 said:
This is also true lol. I finally paid off my Standard Bank one after having it for five years. It was only R25 000 and I was paying a comfortable R575/month, and even withdrew like R4 000 extra at one point from it. This week just used some of my bonus to pay off the remaining R13 000 on it, freedom at last! I was kinda shocked when I worked out that I'd ended up paying R34 000 for around R29 000 worth of debt: it just makes you realise the power of saving vs having ones money continually eroded.
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That's not bad. Some people just carry on taking money out and never really settle it. Similar to a credit card. I was in that position once, but when I finally settled my credit card, it was amazing how quickly I could start saving and have so much more money.
Now my credit card is always in 'credit'.
 
Have had several revolving credit plans over the years. Found that at paying off these loans seems to go on forever even if you pay extra every month. Finally paid off the outstanding balance from my access bond which has a far lower interest rate where clearing up the oustanding balance went very quickly (less interest!!) In my opinion they are revolving credit traps!!
 
ChocolateBadger said:
FNB have offered me a revolving loan for quite a large sum of money pre-approved. Quite interested in it as a 'nice to have' as I've proven to be quite a saint with my credit card.
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I don't have one, but fixed repayment seems to be the biggest difference, and also separation from your transactional account, e.g. you need to do a transfer from the loan account to a transactional account, then make the payment/purchase. Two steps.

Credit cards are a form of revolving loan in a transactional account form.

If you're already a saint with your credit card (paying off the balance in full every month?) then you already pay zero interest, and can't beat that with another facility.

The only gap I can see revolving loans filling is where the interest-free period is unavailable on a credit card, and where the revolving loan facility has a lower nominal interest rate. For example, large / unexpected EFTs or cash withdrawals.

But then an overdraft may be cheaper still...
 
Dan C said:
Bad idea to get one. You will forever be in debt.
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Nonsense. I had a R50k one which I paid off in a few months. It just comes down to personal financial responsibility. Debt is only as bad as one's own spending habits
 
terryZW said:
Nonsense. I had a R50k one which I paid off in a few months. It just comes down to personal financial responsibility. Debt is only as bad as one's own spending habits
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Statistically, you are an anomaly.

Most people find themselves in a deep hole very quickly that they cannot get out of.

Best to avoid this type of debt if at all possible.
 
I've never had to use mine but the fact that it comes "pre-approved" with a whooping 23.75% interest rate is beyond me how can actually use this over an overdraft or credit card facility
 
SauRoNZA said:
Statistically, you are an anomaly.

Most people find themselves in a deep hole very quickly that they cannot get out of.

Best to avoid this type of debt if at all possible.
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Couldn't agree more with this statement!
 
MightyQuin said:
It's cheaper to just use your credit card then...
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In theory yes. I keep my credit card limit low and only use for that to build my credit so I only access 20-30% of that every now and then. I prefer loans because they force me to only borrow and pay back money for stuff I actually need. Got the loan, used it for it's intended purpose and moved on. Credit card debt is way too easy to access and the perceived affordability and convenience is what tends to make them expensive for most people. Statistically, only 18% of those who use their credit card mainly for everyday purchases like groceries pay their card off in full at the end of the month and I really don't want to be in that bracket.
 
terryZW said:
In theory yes. I keep my credit card limit low and only use for that to build my credit so I only access 20-30% of that every now and then. I prefer loans because they force me to only borrow and pay back money for stuff I actually need. Got the loan, used it for it's intended purpose and moved on. Credit card debt is way too easy to access and the perceived affordability and convenience is what tends to make them expensive for most people. Statistically, only 18% of those who use their credit card mainly for everyday purchases like groceries pay their card off in full at the end of the month and I really don't want to be in that bracket.
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Don't get me wrong....I use my CC like cash, never for debt. That's for suckers.

My Cheque account is for my salary, other income and debit orders. Rest of the cash goes into my CC which stays in the green permanently. Cheapest way to shop by far. I buy a packet of crisps using my CC...
 
Remember too you CAN'T close an FNB account with a revolving loan. Unlike other loans like a personal loan that can process a debit order from any current account, a revolving loan can ONLY debit an FNB Cheque account for payment.
I found this out when I tried to move to another bank from FNB some time back. When i tried to move the debit order/auto payment of the revolving loan they said you can't this account has to debit an FNB cheque account in your name.
 
neoprema said:
Remember too you CAN'T close an FNB account with a revolving loan. Unlike other loans like a personal loan that can process a debit order from any current account, a revolving loan can ONLY debit an FNB Cheque account for payment.
I found this out when I tried to move to another bank from FNB some time back. When i tried to move the debit order/auto payment of the revolving loan they said you can't this account has to debit an FNB cheque account in your name.
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I'm with Standard Bank. I also definitely wouldn't want to have multiple accounts and loans with different banks. Too much admin, too many costs. I'm happy with SB and their rewards program.
 
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