Which term is the counterpart to open-ended credit agreements?

Which term is the counterpart to open-ended credit agreements?

• A. Service Credit
• B. Layaway Plans
• C. Closed-ended agreements
• D. Deferred Billing

Answer: (C)

Open-ended credit lets you borrow up to a limit and borrow again as you repay, like a revolving line. The counterpart to that is closed-ended agreements, where you receive a lump sum upfront and repay it over a fixed term, usually in regular installments or by a set payoff date. This distinction matters because closed-ended loans are finite and non-revolving, unlike open-ended credit that remains available for ongoing borrowing. Other options describe different credit arrangements—service credit involves paying after receiving a service, layaway plans require paying before taking possession of goods, and deferred billing simply delays payment after purchase—none of which follow the fixed-term, lump-sum structure of closed-ended agreements.

Open-ended credit lets you borrow up to a limit and borrow again as you repay, like a revolving line. The counterpart to that is closed-ended agreements, where you receive a lump sum upfront and repay it over a fixed term, usually in regular installments or by a set payoff date. This distinction matters because closed-ended loans are finite and non-revolving, unlike open-ended credit that remains available for ongoing borrowing. Other options describe different credit arrangements—service credit involves paying after receiving a service, layaway plans require paying before taking possession of goods, and deferred billing simply delays payment after purchase—none of which follow the fixed-term, lump-sum structure of closed-ended agreements.