Revolving Account

AAA

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".

INVESTOPEDIA EXPLAINS '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. Annual Percentage Rate - APR

    The annual rate that is charged for borrowing (or made by investing), ...
  2. Credit Card

    A card issued by a financial company giving the holder an option ...
  3. General Ledger

    A company's main accounting records. A general ledger is a complete ...
  4. Finance

    The science that describes the management, creation and study ...
  5. Line Of Credit - LOC

    An arrangement between a financial institution, usually a bank, ...
  6. Previous Balance Method

    A credit card accounting method where interest charges are based ...
Related Articles
  1. Credit, Debit And Charge: Sizing Up ...
    Credit & Loans

    Credit, Debit And Charge: Sizing Up ...

  2. Take Control Of Your Credit Cards
    Credit & Loans

    Take Control Of Your Credit Cards

  3. How Credit Cards Affect Your Credit ...
    Credit & Loans

    How Credit Cards Affect Your Credit ...

  4. Understanding Credit Card Interest
    Retirement

    Understanding Credit Card Interest

comments powered by Disqus
Hot Definitions
  1. Due Diligence - DD

    1. An investigation or audit of a potential investment. Due diligence serves to confirm all material facts in regards to ...
  2. Certificate Of Deposit - CD

    A savings certificate entitling the bearer to receive interest. A CD bears a maturity date, a specified fixed interest rate ...
  3. 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 ...
  4. 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 ...
  5. Ratio Analysis

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

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