What are the different types of credit?

Though you may not know it, not all credit is created equal. There are, in fact, two different types: revolving and non-revolving.

Revolving credit is debt you can add to and subtract from each month, and as you might expect the vast majority of all revolving accounts issued around the world are for credit cards. These tend to have higher interest rates and people tend to keep them for years on end.

Meanwhile, non-revolving credit is a loan of some type with a finite amount to it that you pay down over time. For instance, if you have a $15,000 auto loan, you only have to deal with it until that balance plus whatever interest you accrue is paid down. This is also true of student loans and mortgages, which can take longer to pay off.

If you're trying to obtain any type of financing, knowing the difference here can go a long way toward helping you understand your financial responsibilities going forward.