How Do You Define A Revolving Credit Agreement?
Revolving credit agreements are very common loan accounts in the United States. The most common form of revolving debt is the credit card. The opposite of a revolving credit agreement is the closed-end loan. A closed-end loan is also called an installment loan. Common installment loans include car loans and mortgages. Defining a revolving account is relatively easy–especially if you currently have any credit cards. Look at one of your credit card statements. Most credit card statements will show the current outstanding balance, the minimum payment due, the interest charges and rate, the available credit, the previous month’s charges and any penalties (if applicable). Review the monthly payment. Revolving credit agreements only require borrowers to pay a small percentage of the outstanding balance each month. This is called a minimum payment. The payment will cover mostly the interest that accrued the previous month and a very small amount of the actual outstanding balance. Look how mu
