Question

What is an open line of credit?

a. A line of credit which has no current balance
b. A line of credit with a variable interest rate.
c. A line of credit against which additional debt may be drawn.
d. A line of credit which has no credit history requirements.
Please select the best answer from the choices provided

Answer 1

c. A line of credit against which additional debt may be drawn

Explanation:

A line of credit is "open" if there are no specific payoff requirements (except perhaps a minimum payment according to the balance). There is usually a limit to the available credit, but as long as the amount borrowed is less than that limit, additional funds may be borrowed at any time.

A credit card is an example of an open line of credit.