Definition
Credit you can borrow, repay, and borrow again up to a limit, with no fixed end date: credit cards and HELOCs are the main examples. It contrasts with installment loans, which are borrowed once and repaid on a schedule.
Why it matters
Revolving balances drive credit utilization, the second biggest factor in a credit score, and they carry the highest interest rates most households ever pay. A balance that revolves month to month quietly becomes the budget's most expensive line.
Example
A card with a $10,000 limit carries a $4,000 balance: 40% utilization, high enough to drag the score down. Paying it to $800 drops utilization to 8%, and paying in full each month makes the same card a free payment tool instead of 24% APR debt.
Put it into practice
Related terms
This definition is educational, not financial, legal, or tax advice. U.S. rules and limits change; verify time-sensitive details with official sources. See our disclaimer.