Introduction to Virtual Credit Line

In this section of the manual, you will know about virtual credit line, how does it work and what are the benefits of using a virtual credit line.

What is a virtual credit line?

A virtual credit line, also known as a virtual credit account or virtual credit facility, is a financial product offered by some financial institutions that provides customers with a predetermined credit limit that can be used for various purposes, such as making online purchases, paying bills, or accessing funds for emergencies. Unlike a traditional credit line, a virtual credit line typically does not involve a physical credit card or a traditional loan application process.

How does a virtual credit line works?

Here's an example to help illustrate how a virtual credit line works:

Let's say you open a virtual credit line with a financial institution. The lender assesses your creditworthiness based on various factors such as your credit history, income, and financial stability. Once approved, they provide you with a credit limit, let's say $5,000.

You can access this credit line through an online portal or a mobile app provided by the financial institution. From there, you can draw funds from your virtual credit line up to your approved credit limit. For example, you might use $1,000 to purchase a new laptop online.

After making the purchase, you start owing $1,000 to the financial institution. Depending on the terms of your virtual credit line, you will have to make regular payments, typically monthly, to repay the borrowed amount. The financial institution will charge you interest on the outstanding balance until it is fully repaid.

Benefits of virtual credit line

One of the benefits of a virtual credit line is its flexibility. You can use the funds as needed, within the approved credit limit, without having to go through a separate application process for each transaction. Additionally, some virtual credit lines offer rewards or cashback programs, similar to credit cards, which can provide additional benefits to the user.

It's important to note that specific terms and features of virtual credit lines may vary depending on the financial institution offering the product. It's advisable to carefully review the terms and conditions, interest rates, repayment terms, and any associated fees before using a virtual credit line.