Revolving Credit

AAA

DEFINITION of 'Revolving Credit'

A line of credit where the customer pays a commitment fee and is then allowed to use the funds when they are needed. It is usually used for operating purposes, fluctuating each month depending on the customer's current cash flow needs.

Often referred to as "revolver."

INVESTOPEDIA EXPLAINS 'Revolving Credit'

Revolving lines of credit can be taken out by both corporations and individuals. The bank that is in agreement with the customer guarantees a maximum amount that can be loaned to the customer. Along with the commitment fee there are also interest expenses for corporate borrowers and carry forward charges for consumer accounts.

RELATED TERMS
  1. Clean-Up Requirement

    A requirement that is often written into the contracts of annually ...
  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. Cash Flow

    1. A revenue or expense stream that changes a cash account over ...
  5. Cost Of Carry

    Costs incurred as a result of an investment position. These costs ...
  6. Credit

    1. A contractual agreement in which a borrower receives something ...
Related Articles
  1. Will Corporate Debt Drag Your Stock ...
    Investing Basics

    Will Corporate Debt Drag Your Stock ...

  2. How Much Debt Can You Handle?
    Budgeting

    How Much Debt Can You Handle?

  3. Investing In Credit Card Companies
    Mutual Funds & ETFs

    Investing In Credit Card Companies

  4. Home-Equity Loans: What You Need To ...
    Options & Futures

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

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