Revolving Credit

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What is a 'Revolving Credit'

A revolving credit is 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."

BREAKING DOWN '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.

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RELATED FAQS
  1. 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 >>
  2. 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 >>
  3. What are some reasons banks deny applications for checking accounts?

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  4. What are the pros and cons of getting installment credit to pay off your revolving ...

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  5. What are the main categories of debt?

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  6. What are some good alternatives to taking out a line of credit?

    Read more about how opening a line of credit might not be the best answer for you and determine available alternatives if ... Read Answer >>
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