Revolving Credit

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Revolving credit is a type of debt generally associated with credit cards because as consumers pay down their balance each month, they are able to incur more charges.

Basically, it’s a credit agreement (typically a credit card) that allows a customer to borrow against a preapproved credit line when purchasing goods and services. The borrower is only billed for the amount that is actually borrowed plus any interest due.

Other types of revolving credit include lines of credit, such as a home equity line of credit commonly known as a HELOC.