Which type of credit account allows paying in full each month or making a minimum payment based on the balance?

• A. Revolving Credit Accounts
• B. Open-End Credit
• C. Closed-End Credit
• D. Charge Accounts

Answer: (A)

Revolving credit accounts give you a reusable line of credit you can borrow against up to a limit. You can pay the full balance each month to avoid interest, or you can carry a balance and make a minimum payment based on what you owe. This flexibility—carrying a balance from month to month while choosing between paying in full or paying a set minimum—is the hallmark of revolving credit, such as most credit cards.

Open-end credit is the broad category that includes revolving lines of credit, but not all open-end arrangements let you carry a balance in the same way. Closed-end credit involves a loan with fixed payments and a set payoff date, so you don’t revolve a balance. Charge accounts historically required paying the full balance each month and didn’t carry a revolving balance.