Cash credit

Cash credit is a bank product which consists of lending a client a particular amount of money. The borrower (client) simultaneously commits to repaying the money, in addition to interest, at a given time. The cash-credit agreement has to be in written form. The lender (bank or other credit institution) is obliged to make one copy of the agreement immediately available to the borrower.

A credit agreement must include, among other things:

1. The name, surname and address of the borrower, name and address of the lender, and also the name of the organ which registered the lender’s activity, and the number the lender is registered under,
2. The amount of credit,
3. The terms and period of repaying the credit,
4. The annual interest rate,
5. The costs and commission connected with obtaining the credit,
6. Information about the entire cost of the credit at the actual annual interest rate (the relationship between the amount the borrower must repay, or the amount borrowed, and the amount received.
7. Information about basic costs which the borrower is obliged to pay as part of the agreement (e.g. cost of insurance against loss of source of income)
8. Information about rights and consequences of early repayment of credit.

By law, the size of the commission may not exceed certain value of the credit. Credit institutions are able to get around this e.g. by adding the compulsory purchase of insurance against loss of income or increasing the level of the insurance.

For early repayment of credit, a bank or other credit institution often adds additional commission. The borrower often loses out on their privileges, which are got thanks to the promotion in the bank or other credit institution. Such privileges can be, for example, a return of part of the payment. Cash credit may be returned without any reasons necessary within a couple days of the signing of the agreement. This period may soon be altered, because according to the new European Committee regulations it will be fourteen days. Moreover, the borrower will also have to return the credit sum with the additional interest accrued on the capital for the duration from the moment of consenting to the agreement, and the bank will have to return to the borrower the prepared repayments.

The ranking of financial products below was drawn up by recognised banking experts in UK who are actively involved in the world of banking as well as esteemed higher-education lecturers of economics in Britain. More information on the methodology can be found here.

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