What is this? This is what wikipedia says:
“A line of credit is any credit source extended to a business by a bank or financial institution. A line of credit may take several forms such as cash credit, overdraft, demand loan, export packing credit, term loan, discounting or purchase of commercial bills etc. It is like an account that can readily be tapped into if the need arises or not touched at all and saved for emergencies. Interest is only paid on the money actually taken out.The concept has been introduced recently after the East Asian Crisis.The government can borrow money from international monetary institutions without having to handle the problem of an increasing foreign exchange reserves. Lines of credit are often extended by banks and financial institutions to credit worthy customers to overcome liquidity problems.”
So basically it’s a way to ensure that the bank will lend you money when you need it. They ask you for a whole host of information, go through all you financial records, your credit records, recheck your credit rating, and they determine how much money they can lend you at a time. So you get the line of credit, good right? Wrong! Now they’ve got you. You now have to pay them every month because you have their money (which is technically other clients’ money that they’re holding.” You also (obviously) have to pay them back the money you borrowed, with interest. How much you ask? Well i’d explain how to calculate it manually, but its much easier using a line of credit calcuator, click the link to go to the one I found.
The problem I have with banks is that they charge you for everything, even keeping your own money! They charge you for deposits, withdrawals, transfers, payments, cheques, everything! They charge you monthly (usually) a service fee for keeping your money, yet they use it in their business. Yes, you heard correctly, they use OUR money to buy property and other things and sell it at a profit with interest. They also use our money and lend it to others and charge them interest with their repayments. Banks… so unfair, but do we really have much choice?