When it comes to borrowing money, revolving credit can be an easy and flexible choice. But what exactly is revolving credit? Find out how it works and if it makes the most sense for your financial plans.
What Does Revolving Credit Mean?
Revolving credit is a credit line that lets you borrow and pay back money over and over.
Michael Sury, a professor in the Finance Department at the University of Texas at Austin and the managing director of the Center for Analytics & Transformative Technology, says that revolving credit can be thought of as an easy way to borrow money.
In other words, it lets you borrow up to a certain amount when you need to and then pay it back when you have the money. "When the loan is paid off, the money can be borrowed again, which is why it's called a "revolving loan," says Sury.
How does credit that you can keep using?
When you borrow against a line of credit, this is called "revolving credit." Let's say a lender gives you a certain amount of credit that you can use to borrow again and again.
Your credit line, which is also called your credit limit, is the amount of credit you can use each month. On any purchase, you can use as much or as little of that credit line as you want.
You get a bill for the balance at the end of each billing period. If you don't pay it off in full, you have to pay interest on the remaining balance and carry it over to the next month. As you pay down the balance, you can use more of your credit line.
What Does Revolving Credit Mean?
Revolving credit is a credit line that lets you borrow and pay back money over and over.
Michael Sury, a professor in the Finance Department at the University of Texas at Austin and the managing director of the Center for Analytics & Transformative Technology, says that revolving credit can be thought of as an easy way to borrow money.
In other words, it lets you borrow up to a certain amount when you need to and then pay it back when you have the money. "When the loan is paid off, the money can be borrowed again, which is why it's called a "revolving loan," says Sury.
How does credit that you can keep using?
When you borrow against a line of credit, this is called "revolving credit." Let's say a lender gives you a certain amount of credit that you can use to borrow again and again.
Your credit line, which is also called your credit limit, is the amount of credit you can use each month. On any purchase, you can use as much or as little of that credit line as you want.
You get a bill for the balance at the end of each billing period. If you don't pay it off in full, you have to pay interest on the remaining balance and carry it over to the next month. As you pay down the balance, you can use more of your credit line.