Types of Credit

Revolving Credit: A limit on how much you can borrow, which can be used repeatedly as long as you pay back some of it every month.

Installment Credit: Borrowing a fixed amount of money and agreeing to pay it back in equal monthly payments over a set period.

Differences Between Revolving and Installment Credit:

• Repayment: Revolving credit allows flexible payment amounts (minimum required); installment credit has fixed monthly payments.
• Interest: Revolving credit typically has variable interest rates; installment credit usually has fixed rates.
• Balance: Revolving credit balances fluctuate; installment credit balances decrease steadily.