Which type of credit allows ongoing access to funds up to a limit, with the ability to borrow, repay, and borrow again without reapplying?

• A. Installment credit
• B. Unpaid account balance
• C. Credit limit
• D. Revolving credit

Answer: (D)

Revolving credit is a type of borrowing that lets you access a pool of funds up to a set limit. You can borrow what you need, repay all or part of what you owe, and then borrow again without applying for a new loan. This ongoing access and the ability to re-borrow as you repay is the defining feature. Credit cards and lines of credit are common examples.

Installment credit works differently: you borrow a fixed amount once and repay it in scheduled payments over time; you don’t have ongoing access to more funds without taking out a new loan. An unpaid account balance is simply the amount you currently owe, not a borrowing method. A credit limit is the maximum amount you’re allowed to borrow, not how you borrow.