Pros and Cons of Revolving Credit

Even though revolving credit can be helpful sometimes, it also has some drawbacks. Here are the pros and cons of revolving credit in more detail:


It's convenient. If you can borrow money when you need it for almost any expense, you have a lot more freedom than if you had to take out a lump-sum installment loan and pay it back on a set schedule.

It works well. A revolving line of credit, like a credit card, can help your credit score as long as you pay it back on time. "A good way to keep or improve your credit score is to build credit and a good payment history," says Sury.



It costs money. Most of the time, the interest rates on revolving lines of credit are higher than those on installment loans. This is especially true if the line of credit is not backed by anything.


It's not enough. Most of the time, a line of credit has a lower credit limit than a loan that you pay back over time. So, if you need to borrow a lot of money, you might not be able to do it with a revolving line of credit.

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