Definition

Noun: A type of credit arrangement, typically a consumer credit line, where a financial institution extends a maximum borrowing limit. The borrower can repeatedly use funds up to this limit, repay the borrowed amount, and then borrow again up to the limit without needing to reapply for a new loan. The available credit revolves as the borrower makes payments.

Usage

This term is used in personal finance and banking contexts to describe flexible borrowing facilities. - Primary Use: To describe a pre-approved line of credit with a set limit that is available for ongoing use. - Common Contexts: Discussing credit cards, home equity lines of credit (HELOCs), or personal lines of credit.

Examples

• Noun:
  • Her credit card offers revolving credit, so she can make purchases, pay the balance, and then have the full credit limit available again.
  • A home equity line of credit is a form of revolving credit secured by your property.
  • Unlike an installment loan, revolving credit does not have a fixed number of payments.

Advanced Usage

• "Access/Utilize revolving credit": To use an available line of credit.
  • Small businesses often need to access revolving credit to manage cash flow.
• "Revolving credit facility": A more formal term, often used in commercial banking.
  • The company secured a $2 million revolving credit facility with its bank.

Variants and Related Words

• Credit Line / Line of Credit (LOC) (n): A general term for any pre-approved credit facility, which can be revolving or non-revolving.
  • He applied for a personal line of credit to cover unexpected expenses.
• Open-End Credit (n): A synonymous term for revolving credit, emphasizing the open, reusable nature of the agreement.
  • Credit cards are the most common example of open-end credit.

Synonyms

• Reusable Credit: Emphasizes the ability to borrow, repay, and borrow again.
• Open-Ended Credit: Highlights that the credit arrangement is not for a single, fixed-term loan.

Related Terms (Not Phrasal Verbs)

• Credit Limit (n): The maximum amount that can be borrowed under a revolving credit agreement.
  • Her credit limit on the card is $5,000.
• Available Credit (n): The portion of the credit limit that is currently unused and available for borrowing.
  • After her recent purchase, her available credit decreased.

Key Distinctions

• Revolving Credit vs. Installment Credit: Revolving credit (e.g., credit cards) has a reusable limit with variable payments. Installment credit (e.g., auto loans, mortgages) involves borrowing a fixed sum and repaying it in fixed, scheduled payments until the debt is fully paid, after which the account is closed.

Noun

1. a consumer credit line that can be used up to a certain limit or paid down at any time