Revolving Credit is a line of credit where the customer pays a commitment fee and is then allowed to use the funds when they are needed.

• A. A line of credit with no ability to draw funds.
• B. A fixed loan with set payments.
• C. A deposit account with variable balance.
• D. A secured loan backed by collateral.

Answer: (A)

Revolving credit is a flexible arrangement that provides a credit line you can borrow from up to a limit, repay, and borrow again. You typically pay a commitment fee to keep the line open, and you only pay interest on the funds you actually borrow. The defining feature is ongoing access to funds up to the limit, not a one-time loan.

Among the options, the description that mentions a line of credit best fits this concept, because revolving credit is built around having a line you can draw on as needed (up to the limit). The other choices describe a fixed loan with set payments, a deposit account, or a secured loan backed by collateral, which do not capture the revolving, reusable access that characterizes revolving credit. So the line-of-credit option is the closest match to the idea of revolving credit.