Revolving credit is a flexible line of credit that lets you borrow money, repay it, and borrow again — as many times as you want — up to a pre-approved limit. Unlike a regular loan where you get a lump sum, revolving credit is ongoing and reusable.
The most common example? Your credit card. If your card has a $10,000 limit and you spend $3,000, you have $7,000 available. Pay back the $3,000, and your full $10,000 is available again. Home equity lines of credit (HELOCs) and business credit lines work the same way.
You only pay interest on the amount you actually use, not the full limit. However, revolving credit interest rates (especially on credit cards) can be very high — often 18-25% APR. Smart borrowers use revolving credit for short-term needs and pay off balances quickly to minimize interest charges.