Loans and Revolving Credit

Released  July 10, 2006
By Megan Greuling

CHARLOTTE, N.C., July 10, 2006 – Americans looking to borrow money have two main options – loans or revolving credit. Loans allow you to borrow a one-time amount, but revolving credit gives you the right to use and re-use an open line of credit.

How Loans Work

With a loan, the lender or creditor gives you, the borrower or debtor, use of a lump sum of money, to be paid back after time, usually with interest added to compensate for the time the money has been in your possession. Typical types of loans are mortgages, auto loans, student loans and home equity loans.

How Revolving Credit Works

The form of revolving credit that most people use is the credit card. Even though revolving credit is used in everyday financial transactions, it is a little more complicated to understand than a loan. Instead of re-applying for credit every time you need to borrow money, revolving credit lets you apply just once for a line of credit, which is an amount you can use on demand, as needed. Unlike loans, revolving lines of credit have no set timetable for repaying debt. There is generally a minimum payment due each month, based on the balance, but you are free to pay more. Examples of revolving credit are credit cards, home equity lines of credit and overdraft protection for checking accounts.

“Revolving credit is more convenient and accessible than loans, but it is also easier to misuse,” states Anthony Hsieh, president of “Debt on revolving accounts has the potential to stick with you for a long time it you are not careful about repaying the debt quickly. It’s important to be wise with your credit and loan choices and use these outlets to build your credit history and credit score rather than harming it.”

For additional information on loans and revolving credit to help you build a solid credit history, please visit the LendingTree Guide to Smart Borrowing.

About LendingTree, LLC

LendingTree, LLC is the nation’s number one online lending exchange, providing a marketplace that connects consumers with multiple lenders that compete for their business. Since inception, LendingTree has facilitated more than 18 million loan requests and $141 billion in closed loan transactions. LendingTree provides access to mortgages and refinance loans, home equity loans/lines of credit, auto loans, personal loans, and credit cards via and 800-555-TREE.

Founded in 1998 with headquarters in Charlotte, North Carolina, LendingTree, LLC is part of IAC Financial Services and Real Estate, an operating business of IAC/InterActiveCorp (NASDAQ: IACI), which also owns or operates LendingTree Loans, LendingTree Settlement Services, LLC, GetSmart®,®, Domania®, and iNest®.