Which type of credit is similar to a credit card, where charges are paid and the full amount can be borrowed up to a credit limit?

• A. Revolving credit
• B. Installment credit
• C. Non installment credit
• D. Open-ended credit

Answer: (A)

Revolving credit is a line of credit that stays open and can be used repeatedly up to a set limit. With a credit card, you can make charges up to your credit limit, then pay them off or carry a balance. As you repay, the available credit is replenished, so you can borrow again without reapplying. This continual borrow/pay cycle is the hallmark of revolving credit, making it the best match for a credit card behavior.

Installment credit, in contrast, involves borrowing a fixed amount and repaying it in equal installments over a specified term. Open-ended credit is a broader category that includes revolving credit, but the description most directly fits the revolving, reusable borrowing that a credit card provides.