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by notmrjohn on April 21st, 2005
Most credit cards are a form of revolving credit, you apply once and the creditor sets an upper limit to the amount they will loan you. You can use it all at once or just a part of it as often as you wish as long as you don't go over the limit and abide by whatever repayment plan was set up, paid in full upon receipt of a monthly statement, or in several installments, an interest charge is added. If the limit was $1000 and you use $100 you still have $900 credit, if you use $1000 you got none left. The credit can last forever as long as you make your payments. that way you don't have to keep reapplying as you would if you just borrowed $1000 and agreed to pay it back by a certain time. ( Term loan or credit) it's really a revolving loan approval.Over time the interest payments can add up to way more than the $1000 you thought you were borrowing, especially if you only make the minimum payments, you may have noticed ads for loans to pay off credit cards. Borrowing to pay off your borrowing.That's why it's my guess that the real reason it's called "revolving" is because it leads to a never ending cycle of debt. Stay away from credit cards as much as you can.
by KCTrey on April 21st, 2005
Revolving credit deals with things like credit cards, where you have a credit limit.
When you charge something, it eats away at your available credit. Then when you make a payment, you get that credit back, minus interest. If you keep following this cycle, the credit is revolving.
The opposite of this would be something like a car loan. If you get a car loan for $20,000 and make a payment of $10,000, you don't have that money available to spend again.
How do I calculate a car loan payment rate?
by Answerbag Staff on June 9th, 2010
| 1 person likes this
How does this compare to your first car loan experience? See description.
by cloudman on August 9th, 2011
| 1 person likes this
Is auto loan interest tax deductible?
by Answerbag Staff on May 21st, 2010
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What is a vehicle title number?
by Answerbag Staff on May 12th, 2010
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My nephew loaned me $5,000 to purchase a truck, and wants security with a lien on the truck. I make monthly payments to him. We live in TX.
by jimsmith77006 on June 26th, 2011
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Comments
Good explanation of a term not in very common use anymore.
by Grandma Roses - my avatar is my real dog on February 4th, 2006
You can use credit cards to your advantage, but you must pay them in full and on time every month; 2/3 of consumers do not.
by RedJohn on March 3rd, 2006