Which term describes a line of credit that does not require paying the balance in full every month and allows ongoing borrowing?

Which term describes a line of credit that does not require paying the balance in full every month and allows ongoing borrowing?

• A. Open Thirty-Day Account
• B. Open-Ended Credit
• C. Installment Loan
• D. Pawnshops

Answer: (B)

Open-ended credit is a revolving line of credit that you can borrow from up to a limit, repay part or all of what you owe, and then borrow again. You don’t have to pay the full balance each month; you can carry a balance and interest accrues on the outstanding amount. This setup is common with credit cards and lines of credit, providing ongoing access to funds as long as you stay within the limit and make payments. It differs from an installment loan, which is repaid in fixed payments over a set term until it’s paid off. Pawnshops involve loans secured by collateral and aren’t a revolving line of credit, and an Open Thirty-Day Account isn’t a standard form of ongoing credit. So the term that best fits the description is open-ended credit.

Open-ended credit is a revolving line of credit that you can borrow from up to a limit, repay part or all of what you owe, and then borrow again. You don’t have to pay the full balance each month; you can carry a balance and interest accrues on the outstanding amount. This setup is common with credit cards and lines of credit, providing ongoing access to funds as long as you stay within the limit and make payments. It differs from an installment loan, which is repaid in fixed payments over a set term until it’s paid off. Pawnshops involve loans secured by collateral and aren’t a revolving line of credit, and an Open Thirty-Day Account isn’t a standard form of ongoing credit. So the term that best fits the description is open-ended credit.