What Is a Revolving Line of Credit?

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A revolving line of credit is money from a credit card, loan or second mortgage that is available for use to the borrower. Avoid using credit lines with high interest rates, and consider advice from a financial adviser in this free video on credit.

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Video Transcript

Do you have a credit card that you haven't maxed out yet? Well you're one of the few. If you have a credit card where there is still part of the credit that you can draw down, in effect you have a revolving line of credit. Other ways to go and get that type of thing is you go to a bank or a brokerage firm ahead of time and you apply for it. And what they say is yes, we looked at your credit score and we looked at your ability to repay us and we will leave some amount of money available for you to withdraw when you want to do it. And you can put it in and take it out and put it in and take it out, whatever it might be. Is that a good move? Frequently rates on that type of loan are high and in fact it may not be to your advantage to use a personal line of credit setup as a revolver so it's called. Last but not least, second mortgages have become the vehicle to develop revolvers or revolving lines of credit. It's a disaster waiting to happen. You're borrowing money today that you're going to have to payback in the future, probably not a good move. Figure out a better way to do it. I'm Roger Groh at Groh Asset and may the revolver be with you.


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