Revolving Account

DEFINITION of 'Revolving Account'

A type of credit account in which the customer may defer payment on part of the balance. Interest is charged on the unpaid balance and added to the total owed. A credit card is one type of revolving account. A revolving account may also be called a "line of credit" or "credit line".

BREAKING DOWN 'Revolving Account'

A revolving account can be like a major credit card that can be used for payment at any business. Or, a customer can also open up a dedicated line of credit with a business in which the revolving account can only be used at that store. Credit issuers have the choice of whether they charge an annual fee to extend this type of credit, but almost all charge interest on the unpaid balances. If the outstanding balance is paid within the grace period (most commonly 30-45 days), then no interest would be charged.

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