Revolving credit
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Revolving credit is a type of credit that does not have a fixed number of payments, in contrast to installment credit.
Typical characteristics
- The borrower may use or withdraw funds up to a pre-approved credit limit.
- The amount of available credit increases and decreases as funds are borrowed and then repaid.
- The credit may be used repeatedly.
- The borrower makes payments based only on the amount they've actually used or withdrawn, plus interest.
- The borrower may repay over time (subject to any minimum payment requirement), or in full at any time.
Examples
- Credit card
- Line of credit
- Some loans, such as some home equity loans