Credit cards use something called revolving credit.

💡Revolving credit = borrowing up to a limit and only paying back the amount spent

This is exactly how credit cards work! 👀

Based on your income and financial health, your credit card issuer will give you a monthly limit 💪

Then, you can spend up to this limit and pay it all back 🎉

Revolving credit does not have any pre-payment penalties, so you can pay it back whenever, but usually no later than the end of the month 📅

As a reminder, credit cards don’t give you extra money - they just delay the payments for your spending 🤔

Unlike installment credit, revolving credit & credit cards are often used for everyday expenses. 💸

Revolving credit has variable interest rates, meaning the amount you repay each month can fluctuate based on the amount you have borrowed. 📈

Lastly, revolving credit can be used indefinitely, as long as you stay within the credit limit and make regular payments. 🤝

Now you know the differences between installment and revolving credit! 🤓