Revolving credit

From Wikipedia, the free encyclopedia

Revolving credit is a type of credit that does not have a fixed number of payments, in contrast to installment credit. Examples of revolving credits used by consumers include credit cards. Corporate revolving credit facilities are typically used to provide liquidity for a company's day-to-day operations.

[edit] Typical characteristics

The borrower may use or withdraw funds up to a pre-approved credit limit.
The amount of available credit decreases and increases as funds are borrowed and then repaid.
The credit may be used repeatedly.
The borrower makes payments based only on the amount they've actually used or withdrawn, plus interest.
The borrower may repay over time (subject to any minimum payment requirement), or in full at any time.
In some cases, the borrower is required to pay a fee to the lender for any money that is undrawn on the revolver; this is especially true of corporate bank loan revolving credit facilities.