Which statement best describes a line of credit that can be used repeatedly up to a borrowing limit?

Which statement best describes a line of credit that can be used repeatedly up to a borrowing limit?

• A. Open line of credit
• B. Revolving account
• C. Both open line of credit and revolving account are correct
• D. Charge card

Answer: (C)

Open-end or revolving credit describes a line of credit that can be used repeatedly up to a set limit. An open line of credit is the same idea: it stays open and you can borrow, repay, and borrow again within the limit. A revolving account is the formal term for this type of credit, like a credit card, where the balance can carry over from month to month as you repay and reuse the available credit. A charge card, by contrast, typically requires paying the full balance each period and doesn’t allow a persistent revolving balance, so it doesn’t fit the description. That’s why both open line of credit and revolving account correctly describe a line of credit that can be used repeatedly up to a borrowing limit.

Open-end or revolving credit describes a line of credit that can be used repeatedly up to a set limit. An open line of credit is the same idea: it stays open and you can borrow, repay, and borrow again within the limit. A revolving account is the formal term for this type of credit, like a credit card, where the balance can carry over from month to month as you repay and reuse the available credit. A charge card, by contrast, typically requires paying the full balance each period and doesn’t allow a persistent revolving balance, so it doesn’t fit the description. That’s why both open line of credit and revolving account correctly describe a line of credit that can be used repeatedly up to a borrowing limit.