What Does a Revolving Credit Card Account Mean?

If you're confused by some of the credit card jargon; you're not alone. The terminology can be confusing but, before you sign on the dotted line, you'll want to take time to educate yourself on a few of the basics. Revolving credit is one of the key terms. When you apply for a credit card, most of the time you'll be getting an open or revolving credit account.

In simple terms, revolving credit means that once you're approved and have been given a credit limit (the amount you're allowed to borrow based on your credit score and history), then you're free to make charges and payments at will as long as you stay within the preset credit limit. Each month you'll be required to make a minimum payment that will include interest charges. As you reduce your balance, you'll have more of the funds available to use, up to your credit limit. As an example, if your credit limit is set at ,500 and you charge purchases totaling 0, you'll have ,000 remaining for future purchases. If you then make a payment of 0 when the bill is due, you'll have ,100 in available credit to use.

\"Gas Cards\"

Of course, any interest charges will need to be paid off with the monthly payment as well. Revolving credit accounts can be either secured or unsecured and, they can include rewards, cash back, miles offers or gas cards. MasterCard®, Visa® and Discover® cards are examples of revolving credit cards. American Express also offers revolving credit cards but they're more well-known for their non-revolving or closed account charge cards. The difference is that with the charge cards, you won't be charged interest but you will be required to pay your entire balance off each month. There are literally hundreds of revolving credit cards available.

What Does a Revolving Credit Card Account Mean?
What Does a Revolving Credit Card Account Mean?

Denise is a freelance writer who works with CompareCards.com to help consumers make informed credit decisions. CompareCards.com is a privately held organization and has assisted thousands of consumers in making credit decisions. Use can use the Online Card Comparison tool at www.comparecards.com, to simplify your search of personal and business credit cards or to get more information on revolving credit lines.