REVOLVING CREDITS Meaning and
Definition
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Revolving credits refer to a type of credit arrangement offered to individuals or businesses that allows them to borrow and repay funds repeatedly within a specified credit limit. It is a flexible form of credit where the available credit balance replenishes as the borrower repays the outstanding amount. These types of credits are commonly seen in the form of credit cards or lines of credit.
In a revolving credit arrangement, the borrower has the freedom to utilize the funds for various purposes as long as they stay within the predetermined credit limit. They can borrow any amount up to the limit, repay it, and then borrow again. There is no fixed repayment schedule, and the borrower has the flexibility to make minimum monthly payments or clear the entire outstanding balance.
Revolving credits typically charge interest on the outstanding balance, and the interest rate is commonly variable, meaning it can fluctuate based on prevailing market rates or other factors mentioned in the credit agreement. The interest is typically computed on a daily or monthly basis.
These forms of credit provide individuals and businesses with greater financial flexibility, helping manage short-term cash flow needs and providing a backup financial resource. However, it is essential to use revolving credits responsibly, as excessive borrowing and accumulation of debt can lead to financial strain and difficulties in repayment.
Common Misspellings for REVOLVING CREDITS
- eevolving credits
- devolving credits
- fevolving credits
- tevolving credits
- 5evolving credits
- 4evolving credits
- rwvolving credits
- rsvolving credits
- rdvolving credits
- rrvolving credits
- r4volving credits
- r3volving credits
- recolving credits
- rebolving credits
- regolving credits
- refolving credits
- revilving credits
- revklving credits
- revllving credits
- revplving credits
Etymology of REVOLVING CREDITS
The word "revolving credits" is formed by combining the words "revolving" and "credits".
The term "revolving" originates from the Latin word "revolvere", which means "to turn back" or "to rotate". In the context of credit, it refers to a type of credit that allows the user to borrow money up to a certain limit and make multiple repayments. As the user pays off the borrowed amount, the credit becomes available again, much like a revolving door or a rotating cycle.
The word "credit" has its roots in the Latin word "creditum", which means "a loan". It signifies the trust or confidence placed in a person to repay borrowed money or goods at a later date.
Combined, "revolving credits" refers to a type of borrowing that enables individuals or businesses to repeatedly access funds up to a predefined limit as long as the borrowed amount is repaid.
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