What is the maximum borrowing capability typically associated with revolving open-end credit?
Understand the Problem
The question is asking about the maximum amount of money that can be borrowed using a type of credit known as revolving open-end credit. This involves understanding the concepts surrounding credit limits and how revolving credit works.
Answer
The maximum borrowing capability is determined by a pre-approved credit limit.
The final answer is that the maximum borrowing capability typically associated with revolving open-end credit is determined by a pre-approved credit limit set by the lender.
Answer for screen readers
The final answer is that the maximum borrowing capability typically associated with revolving open-end credit is determined by a pre-approved credit limit set by the lender.
More Information
Revolving credit allows the borrower to use funds up to a specified limit and reuse funds as debts are paid off. This credit limit is generally set based on the borrower’s creditworthiness and financial history.
Tips
A common mistake is not realizing that revolving credit limits can be adjusted by the lender based on the borrower's behavior and payment history.
Sources
- Open-End Credit: Definition, How It Works, vs. Closed ... - Investopedia - investopedia.com
- What Is Revolving Credit? What It Is, How It Works, and Examples - investopedia.com
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