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l e c r é d i t
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Revolving credit
Revolving open-end credit is found with most credit cards. Under agreement with the lender, credit is extended for use by the consumer. An outside limit is established, depending upon the debtor's credit history and ability to handle the debt repayment. The financial institution gives the debtor a credit card with a credit limit, such as $1,000, $5,000, or $10,000, and the debtor can choose how much of the available credit s/he will use at any given time. Usually the debtor makes periodic (usually monthly) payments, and continues to use the available credit as needed, as long as each periodic payment meets pre-determined minimum amounts.
Revolving open-end credit requires active management by the debtor. The debtor can decide to pay off the entire outstanding debt when the statement is present, pay off more than the required minimum payment (but not the entire amount), or simply make the minimum required payment. The debtor thus can determine how much credit will be available to him/her at any given time. |
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