Ifacreditaccountmaybeusedagain,thatisthemaindistinctionbetween revolvingandnon-revolvingcredit.Youmustbeawareofafewadditionalchanges aswell.
Open-endedvs.closed-ended:With revolving credit, you can draw on the line of credit regularly for as long as the account is open, according to a set available credit. On the other hand, with non-revolving credit, you can only take out the loan once. When it has been paid off, the account is officially closed. Installment credit is another name for non-revolving credit. Auto, home, and student loans are typical types of installment credit.
Payments:Non-revolving credit accounts are typically paid off over a predetermined time in periodic, equal monthly installments or payments. Sometimes, a fee can also be associated with paying off the loan early.
Interestrates: The interest rate on revolving credit may be greater than on nonrevolving credit. Additionally, if you have revolving credit, your minimum monthly payment may vary based on your balance. If you have non-revolving credit, your monthly payments will be the same.
Flexibility: You may also have additional flexibility if you use revolving credit.
For instance, a credit card can be used for various transactions. However, many non-revolving credit arrangements are made for a single purpose, such as purchasing a car or a home.