A consumer promises to pay the full balance owed each month

A consumer promises to pay the full balance owed each month

• A. Installment Loan
• B. Open Thirty-Day Account
• C. Service Credit
• D. Layaway Plans

Answer: (B)

Think about how different forms of consumer credit are structured in terms of repayment. The description—promising to pay the entire balance owed each month—fits an open credit arrangement, often called a charge account. In this setup, you can make purchases and receive a monthly bill for the total amount due, with the expectation that you pay that full balance within a short period (typically about 30 days). Because you pay the full balance each month, you usually avoid interest and maintain a clean payment history. This differs from an installment loan, which fixes a set payment amount over several months regardless of whether you pay it all at once. It also isn’t service credit, which covers paying for services after you’ve used them and isn’t tied to a strict 30-day pay‑in‑full cycle. And it isn’t a layaway plan, where you pay over time to reserve an item you don’t receive until it’s fully paid.

Think about how different forms of consumer credit are structured in terms of repayment. The description—promising to pay the entire balance owed each month—fits an open credit arrangement, often called a charge account. In this setup, you can make purchases and receive a monthly bill for the total amount due, with the expectation that you pay that full balance within a short period (typically about 30 days). Because you pay the full balance each month, you usually avoid interest and maintain a clean payment history.

This differs from an installment loan, which fixes a set payment amount over several months regardless of whether you pay it all at once. It also isn’t service credit, which covers paying for services after you’ve used them and isn’t tied to a strict 30-day pay‑in‑full cycle. And it isn’t a layaway plan, where you pay over time to reserve an item you don’t receive until it’s fully paid.