Revolving credit

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Line of Credit

An agreement between a bank and a company or an individual to provide a certain amount in loans on demand from the borrower. The borrower is under no obligation to actually take out a loan at any particular time, but may take part of the funds at any time over a period of several years. This agreement is fairly common in situations in which a business must make payroll but does not always have the operating income to do so, especially when its operating income is seasonal or otherwise varies from month to month. It is also called open-end credit or a revolving line of credit. See also: Credit Card.

Revolving credit.

A revolving credit arrangement allows you to borrow up to your credit limit without having to reapply each time you need cash. As you repay the money you have borrowed, it is available to be borrowed again.

For example, if you have a credit card with a credit limit of $1,500 and you make a purchase of $400, the amount of credit you have available is $1,100. But when you repay the $400, your credit limit goes back to $1,500 -- assuming you haven't charged anything else on the card.

At any given time, your balance due may fluctuate from zero to the maximum credit limit. If you don't use the credit line in any billing cycle, no fees apply in most cases. But if you have a balance due and don't repay the full amount, finance charges are added to your next bill.

Some revolving credit arrangements, such as a home equity line of credit, may have a predetermined end date, but the majority are open-ended as long as you make at least the minimum required payment on time.

References in periodicals archive ?
Wells Fargo Retail Finance is the arranger and administrative agent for this new Revolving Credit Facility.
The 2011 Revolving Credit Facility continues to be guaranteed and secured by the same collateral package and guarantees that secured the prior revolving credit facility, including being supported by, among other things, guarantees from Revlon, Inc.
A four-year, $500 million revolving credit facility to GMAC International Finance in the Netherlands;
23, 2006, the company replaced its existing $800 million unsecured revolving credit facility with an amended $800 million secured revolving credit facility.
On October 18, 2006, the company entered into an amendment to its Revolving Credit Agreement and its Term Loan Agreement extending the time period for delivering its Form 10Q for the quarter ended August 31, 2006 to December 24, 2006.
5 million loan syndication, consisting of an amended floor plan credit facility and a revolving credit facility.
The revolving credit facility is initially scheduled to mature on May 1, 2009.
Revolving credit borrowings under the new senior secured credit facility will initially bear interest at an annual rate equal to the London interbank offered rate (LIBOR) plus 175 basis points, representing an initial interest rate of 7.
The new revolving credit facility and term loan will both have lower margins than the existing loan at TDG, the revolving credit facility at TDI and the term loan at TDI.
Leap and its subsidiaries are also subject to a financial covenant with respect to a maximum consolidated senior secured leverage ratio and, if a revolving credit loan or uncollateralized letter of credit is outstanding, with respect to a minimum consolidated interest coverage ratio, a maximum consolidated leverage ratio and a maximum fixed charge ratio.
NASDAQ: CKXE) announced today that it has entered into a $125 million revolving credit agreement with a group of lenders led by Bear, Stearns & Co.
The company intends to use the proceeds to reduce debt outstanding under its revolving credit facility.