What is Personal Credit?

Personal Credit (also known as personal credit line, credit line, line of credit) is a standby loan facility offered by the banks to consumers.


Mr Tan has a Personal Credit of $10,000 from Bank A. He needs an urgent cash of $5000 for business use.
The interest on Personal Credit is at 8% annually.

Mr Tan issue a cheque of $5000 to his supplier from his Personal Credit account and 45 days later, he has extra cash and want to pay off the loan outstanding.

Total Personal Credit used = $5000
Personal Credit interest rate = 8% annually
Total interest days on Personal Credit = 45 days

Total interest = Total personal credit used x (total interest day/ 365 days) x Personal credit interest rate = $5000 x (45/365) x 8% = $49.32

Total amount need to pay bank A = Total Personal Credit used + Total interest = $5000 + 49.32 = $5049.32

Take note that this example is for illustration only. The borrower needs to pay a minimum sum back to Bank A every month. Generally, it is 3-5% of the personal credit loan outstanding or $50-$80 whichever is higher.

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