Open-End Credit

AAA

DEFINITION of 'Open-End Credit'

A pre-approved loan between a financial institution and borrower that may be used repeatedly up to a certain limit and can subsequently be paid back prior to payments coming due. The pre-approved amount will be set out in the agreement between the lender and the borrower.

Open-end credit is also refered to as a "line of credit" or "revolving line of credit".

INVESTOPEDIA EXPLAINS 'Open-End Credit'

Open-end credit agreements are advantageous to borrowers, as they exert more control over how much they borrow and when. In addition, interest is not usually charged on the part of the line of credit that is not used, which can lead to interest savings for the borrower.

RELATED TERMS
  1. Remittance Letter

    A document sent by a customer, which is often a financial institution ...
  2. Credit Netting

    A system whereby the number of credit checks on financial transactions ...
  3. Closed-End Credit

    A loan or extension of credit in which the proceeds are dispersed ...
  4. Commercial Credit

    A pre-approved amount of money issued by a bank to a company ...
  5. Triggering Term

    A word or phrase that when used in advertising literature requires ...
  6. Credit

    1. A contractual agreement in which a borrower receives something ...
Related Articles
  1. Home-Equity Loans: What You Need To ...
    Options & Futures

    Home-Equity Loans: What You Need To ...

  2. Home-Equity Loans: The Costs
    Options & Futures

    Home-Equity Loans: The Costs

  3. Different Needs, Different Loans
    Options & Futures

    Different Needs, Different Loans

  4. Leveraging Leverage For Bigger Profits
    Home & Auto

    Leveraging Leverage For Bigger Profits

comments powered by Disqus
Hot Definitions
  1. Certificate Of Deposit - CD

    A savings certificate entitling the bearer to receive interest. A CD bears a maturity date, a specified fixed interest rate ...
  2. Days Sales Of Inventory - DSI

    A financial measure of a company's performance that gives investors an idea of how long it takes a company to turn its inventory ...
  3. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
  4. Ratio Analysis

    Quantitative analysis of information contained in a company’s financial statements. Ratio analysis is based on line items ...
  5. Days Payable Outstanding - DPO

    A company's average payable period. Calculated as: ending accounts payable / (cost of sales/number of days).
  6. Net Sales

    The amount of sales generated by a company after the deduction of returns, allowances for damaged or missing goods and any ...
Trading Center