Certified Consumer Debt Specialist Practice Exam

Revolving credit refers to a type of credit arrangement allowing consumers to borrow and repay funds repeatedly, up to a specified limit. This flexibility is a key characteristic of revolving credit. As borrowers make payments on the balance, they can access that credit line again for future purchases, making it distinct from other credit types such as installment loans, which are paid off in fixed amounts over a set timeframe.

The concept is exemplified by credit cards, where a cardholder can spend up to the credit limit, make payments, and then borrow again without reapplying for credit. This contrasts with credit that is used only once and paid in full, which does not allow for repeated access to funds; credit that does not require repayment, which does not describe any legitimate credit arrangement; and credit that is only available for emergencies, which limits the usage of credit and does not reflect the open-access nature of revolving credit. Thus, the description of being able to use credit repeatedly aligns perfectly with the definition of revolving credit.