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.

RELATED TERMS
  1. Revolving Credit

    A line of credit where the customer pays a commitment fee and ...
  2. Revolver

    Revolvers are a major source of profits for credit card issuers ...
  3. Credit Card Balance

    The amount of charges, or lack thereof, owed to the credit card ...
  4. Available Credit

    The unused portion of an open line of credit, such as a credit ...
  5. Seasonal Credit

    Any type of credit arrangement that permits corporate borrowers ...
  6. New Balance

    The new balance is the sum of your previous balance, payments, ...
Related Articles
  1. Personal Finance

    What's a Revolving Line of Credit?

    A revolving line of credit is an arrangement made between a company or an individual and a bank to borrow money on a short-term basis.
  2. Personal Finance

    6 Ways To Build Credit Without A Credit Card

    It's definitely possible – if a bit more complicated – to build a credit history without traditional credit cards. Just follow these steps.
  3. Personal Finance

    Get A Free Ride From Credit Companies

    Find out how to make your credit cards work for you - not against you.
  4. Personal Finance

    Everything You Need To Know About Credit Card Rates

    Understanding credit card rates will help you choose the right credit card, and avoid any unpleasant surprises.
  5. Personal Finance

    Why Too Many Credit Cards Can Hurt Your Credit Score

    Find out why having too many credit card accounts can adversely impact your credit score if the cards are not managed properly.
  6. Personal Finance

    Should You Close Your Credit Card?

    Find out the consequences before deciding to end your credit agreement.
  7. Small Business

    How to Use Small Business Credit Cards

    A small business credit card can be a convenient way to increase your company's purchasing power, but must be carefully managed.
  8. Personal Finance

    Take the Right Steps to Build Excellent Credit

    There are several things you can do to protect and improve your credit score.
RELATED FAQS
  1. What are some reasons banks deny applications for checking accounts?

    Understand what a revolving credit account is and what a general line of credit is, and learn the differences between the ... Read Answer >>
  2. What are the differences between revolving credit and a line of credit?

    Understand how to differentiate between a line of credit and a revolving credit account, and find out why business owners ... Read Answer >>
  3. What are some examples of good situations in which to use revolving credit?

    Learn how to use revolving credit responsibly, and find out how to avoid major credit problems with your revolving credit ... Read Answer >>
  4. What is the use of having revolving credit if your credit score suffers for using ...

    Is revolving credit right for you? The benefits greatly outweigh the risk when used responsibly, but it also has the ability ... Read Answer >>
  5. What are the differences between revolving credit and installment credit?

    Discover how to distinguish between installment credit loans and revolving credit loans, and learn how they affect your credit ... Read Answer >>
Trading Center