Definition of Revolving Credit

What is revolving credit? What is the definition of the term revolving credit?

There are two types of credit - revolving credit and non-revolving credit.

Revolving credit is when borrowers have access to a certain amount of money that doesn't require a final date to be paid off. As payments on the outstanding balance are made, more credit becomes available.

- Revolving Credit definition --For instance, a credit card is a type of revolving credit.

Let's say that you have a credit card with a $10,000 limit. You charge $5,000 over the course of the month, which leaves you with available credit of $5,000 by the end of the month.

If you pay off the full balance at the end of the month, then you are back to having $10,000 in borrowing power on your credit card. This is revolving credit.

An example of non-revolving credit is a car loan. With a car loan, you have a set amount of payments that need to be made until the car is yours. Once the car is paid off, there is no more credit available, and your loan is completed.

An example of revolving credit is a HELOC (home equity line of credit).

-- Articles That Mention Revolving Credit:

US Consumer Credit Continues To Trend Higher

Credit Card Debt Ticks Up in The United States After a Long Ride Down

It's Now Been Three Years Since The "Great Recession" Started..

Outstanding Consumer Revolving Credit Declines For the 24th Straight Month

Americans Continued To Pay Down Their Credit Credit Balances In June