A clothing store credit card is a type of revolving consumer debt, often referred to as revolving credit.

What type of debt is it?

  • A clothing store credit card is considered revolving credit because:
    • You get a credit limit you can repeatedly borrow against, as long as you stay under the limit and make payments.
* The amount you owe changes as you make new purchases and payments, rather than being a fixed loan.
  • It is also a form of consumer debt, since it is used to buy personal goods like clothes rather than business or investment items.

How revolving credit works

  • With revolving credit:
    • You can carry a balance from month to month instead of paying it off in one fixed schedule, unlike an installment loan (like a car loan).
* Interest is charged on any unpaid balance, and store cards often have relatively high interest rates.
  • As long as you make at least the minimum payment, the account usually stays open and available for future use.

Why this matters for you

  • Because it is revolving consumer debt:
    • High balances and missed payments can hurt your credit score.
* Paying the balance in full each month helps avoid interest and keeps the debt from growing.
  • Understanding that a clothing store card is revolving credit can help you compare it to other options like personal loans or installment plans, which have different repayment structures and risks.

Answer in one line for studying:
A clothing store credit card is an example of revolving consumer debt (revolving credit).