Revolving Credit

Revolving credit is a contractual agreement between a bank and a borrower whereby the bank agrees to extend a maximum loan amount for some specified period of time. As the borrower repays a portion of the loan, an amount equal to the repayment can be borrowered again and again under the terms of the loan agreement. Credit Cards, Department Store Cards and Overdraft Protection Lines are the most common types of consumer revolving credit. In all three of these examples monthly payments are substantially less than the full amount due and the balance can be carried forward, subject to additional finance charges, for long periods of time.