What is a credit card an example of?

A credit card is an example of a revolving credit line because it allows the cardholder to borrow money within a certain limit repeatedly. This means that you can use the credit card for purchases, pay it off, and then borrow again, creating a cycle of borrowing and repayment. The key feature of revolving credit is that as you pay down your balance, the credit available to you resets, giving you continuous access to funds up to the limit of your credit line.

This differs from other types of credit, such as secured loans and installment loans. A secured loan is typically backed by collateral, which means if the loan is not repaid, the lender can take the collateral. An installment loan, on the other hand, is a loan amount that you borrow all at once and repay in fixed payments over a set period (like a car loan or home mortgage). A debit loan is not a common term in financial literacy, and it does not refer to a recognized type of credit product, which underscores why revolving credit is the most fitting classification for a credit card.