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What Is Revolving Credit?
If you're looking into personal finance topics, you may have encountered the term "revolving credit." And while it may seem like a confusing concept, we assure you it's easier to wrap your head around than you currently believe.
This blog reviews everything you need to know about revolving credit, its workings, and its various types.
The Ultimate Guide To Revolving Credit
Revolving credit is a credit line that stays open even as you pay the balance. As the name suggests, you can continuously access credit up to a certain amount, repaying the balance in one go or by making regular payments. With every payment, you reopen the available credit minus any fees.
This vehicle helps finance significant expenses, settle regular purchases, and earn rewards.
How Does Revolving Credit Work?
When you open a revolving credit account, you'll be given a credit limit (i.e., the highest amount you can withdraw). After every billing cycle, you will get a statement displaying your balance — the amount you need to repay. Then, you're left with two options:
- Pay off the balance in full.
- Revolve (i.e., carry over) a portion of the outstanding debt to the following month. While you cannot forward the whole balance, you can make only the minimum payment. Your revolving credit agreement will mention the specific amount as a flat fee or a percentage.
Typically, revolving credit is approved without an expiration date. If your account remains in good standing, the bank will allow your agreement to continue. Over time, your provider may raise your credit limit to urge you to spend more, but this tends to happen only for dependable customers.
What Are The Different Types Of Revolving Credit?
As you may have realized, there isn't a loan called "revolving credit." Instead, revolving credit is the umbrella term for various loans and financial vehicles. The most common types are as follows:
Credit Cards
Credit cards are unarguably the best-known type of revolving credit. You use them to purchase things up to your limit and repay the lender for the amount you spend plus fees. You may earn rewards for certain purchases in specific categories depending on your particular credit card. Some even offer benefits, like prolonged product warranties for certain things you buy with the card.
Lines of Credit
Personal lines of credit let you borrow up to your credit limit, but all banks or credit unions don't offer them. The draw period is between three and five years, allowing you to withdraw cash/make purchases using a card. You repay the amount borrowed monthly, ranging from the necessary minimum to the total balance.
Home Equity Lines of Credit
A HELOC (home equity line of credit) is similar to the abovementioned credit line. However, it utilizes your home as collateral. It allows you to borrow against the equity you have in your home. Equity is the amount whose value exceeds your outstanding mortgage balance.
Unlike credit cards, HELOCs tend to come with a draw period (i.e., a timeframe within which to withdraw from the pot). While specific draw periods vary, they tend to fall between five and ten years, with repayment periods ranging from ten to 20 years.
Depending on your provider, you can borrow anywhere from 60% to 85% of your house's equity.
Does Carolina Payday Loans Inc. Offer Revolving Credit?
No, we don't offer revolving credit. However, we offer payday loans — a short-term loan designed to give you access to a small amount during emergencies. You can borrow between $100 and $550 to cover the costs of home repairs, car repairs, medical bills, veterinary fees, and other unexpected scenarios.
Individuals with low credit scores often use our payday loans, as we don't place as much importance on your ranking; we use other factors to establish your affordability.
To get a payday loan from us, you will need:
- a blank check from your active checking account;
- your most recent pay stub and
- your government-issued ID, like your driver's license, passport, or student ID card.
While specific timelines can vary, the in-person portion can take as little as half an hour, and you'll receive your money within 48 hours. It's much quicker than traditional loans and even most revolving credit options.
Secure A Loan from Carolina Payday Loans, Inc. Today!
Revolving credit has its uses, but it isn't an option for everyone or all scenarios. If an emergency loan suits you better, don't hesitate to contact us at Carolina Payday Loans, Inc. Complete the online form with all the information, and we'll give you a call to help you through the process.
Note: The content provided in this article is only for informational purposes, and you should contact your financial advisor about your specific financial situation.