Is the Account Open- or Closed-End Credit?
Determining whether an account is open-end or closed-end is not always easy. Generally, if you can use the account repeatedly, it’s open-end credit (also called “revolving credit”). Your payments vary depending on how much credit you have used in a certain period of time. The most common example of open-end credit is a credit card. Closed-end credit usually involves a single transaction, such as the purchase of a house or car, and the payments are fixed in amount and number. Many transactions fall somewhere in between open- and closed-end credit. Also, many creditors try to characterize a closed-end account as open-end, either to take advantage of a longer statute of limitations or to avoid providing the more extensive disclosures required for closed-end credit. The statute of limitations for open- and closed-end accounts is often different. To complicate matters even more, the statute of limitations for an open-ended account is not always clear. Some states have a special statute of l
Related Questions
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