What type of credit allows a consumer to borrow, repay, and borrow again?

Revolving credit is a type of credit that enables consumers to borrow funds up to a certain limit, repay the borrowed amount, and then borrow again as needed. This cycle can continue as long as the account stays in good standing and the consumer remains under the established borrowing limit.

This feature of being able to continuously borrow and repay is characteristic of revolving credit accounts, such as credit cards. Unlike fixed credit, which provides a specific loan amount that must be paid back in full within a set term, or closed-end credit, which typically involves a single loan that is repaid through a series of fixed payments, revolving credit offers flexibility and ongoing access to credit. Open credit usually refers to a credit arrangement that allows for ongoing borrowing but is less commonly used as a standard term compared to revolving credit.

In summary, the defining characteristic of revolving credit is its ability to let consumers borrow, repay, and re-borrow, making it a versatile option in personal finance management.