Open ended credit (revolving) is described as which of the following?

Open ended credit (revolving) is described as which of the following?

• A. Credit extended in advance and revolving up to a limit
• B. A loan for a specific amount due at a future date
• C. No credit lines allowed
• D. Credit extended with fixed repayment schedule

Answer: (A)

Open-ended revolving credit is a credit arrangement where a maximum limit is established in advance and you can borrow up to that limit, repay what you borrow, and then borrow again without reapplying. It stays available over time, rather than being a one-time loan with a fixed payoff date. Interest accrues on the outstanding balance, and you typically have a minimum payment each cycle. This description matches the idea of credit extended in advance and revolving up to a limit. The other descriptions describe different concepts: a loan for a specific amount due at a future date is a closed-end loan, no credit lines allowed contradicts having a credit limit, and a fixed repayment schedule is typical of installment credit, not revolving credit.

Open-ended revolving credit is a credit arrangement where a maximum limit is established in advance and you can borrow up to that limit, repay what you borrow, and then borrow again without reapplying. It stays available over time, rather than being a one-time loan with a fixed payoff date. Interest accrues on the outstanding balance, and you typically have a minimum payment each cycle. This description matches the idea of credit extended in advance and revolving up to a limit.

The other descriptions describe different concepts: a loan for a specific amount due at a future date is a closed-end loan, no credit lines allowed contradicts having a credit limit, and a fixed repayment schedule is typical of installment credit, not revolving credit.