Revolving Credit

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Definition of 'Revolving Credit'

Revolving credit is a type of credit that allows you to borrow money up to a certain limit and repay it over time, as you wish. You can make payments as often as you like, as long as you make at least the minimum payment each month. The interest rate on revolving credit is usually higher than other types of loans, such as personal loans or car loans.

Revolving credit is often used to pay for everyday expenses, such as groceries, gas, and clothing. It can also be used to make larger purchases, such as furniture or appliances.

There are two main types of revolving credit: credit cards and lines of credit. Credit cards are issued by banks and other financial institutions, and they allow you to make purchases at any merchant that accepts the card. Lines of credit are typically offered by banks and credit unions, and they can be used to make purchases at any merchant that accepts the card or to withdraw cash from an ATM.

Revolving credit can be a convenient way to borrow money, but it is important to use it responsibly. If you do not make your payments on time, you will be charged interest and fees, and your credit score may be negatively affected.

Here are some tips for using revolving credit responsibly:

* Only use revolving credit for purchases that you can afford to repay.
* Make your payments on time, every time.
* Keep your credit utilization ratio low (below 30%).
* Do not open too many new accounts at once.
* Be aware of the interest rate and fees associated with your credit card or line of credit.

If you are considering using revolving credit, be sure to do your research and compare different offers before you make a decision. You can find more information about revolving credit on the websites of the Federal Trade Commission (FTC) and the Consumer Financial Protection Bureau (CFPB).

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