Is a line of credit an open-ended loan?

Yes. A line of credit is an open-end loan. While a closed-end loan disburses a lump sum upfront and requires the borrower to repay it in predetermined installments, a line of credit permits borrowers to obtain and repay funds continuously.

What happens if you open a credit line and don't use it?

A lender will not charge you interest or fees if you open a credit line and don't use it. While the credit limit may remain available for future use, some lenders may close an inactive credit line after a certain period, potentially lowering your credit score.

What is the most popular type of open-end credit?

Credit cards are the most popular open-end credit option because of their flexibility and convenience. Cardholders can use them however they choose and pay the balance over time or in full each month. Furthermore, credit cards are often unsecured and don't require collateral or a deposit. 

About the Author

Bobby Samuels

Bobby Samuels

Writer and Business Communications Consultant

Bobby's introduction to stock options at a hi-tech firm left him perplexed and determined to expand his knowledge in finance. He pursued a Master's degree in Finance at Harvard University. His diverse client base that includes CEOs, CFAs, private equity executives, venture capitalists, global investment firms, real...

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