What is true about open-end credit?

Question

It is not typically used for a single purchase but for many purchases over a period of time.

This type of credit is sometimes referred to as a consumer loan.

This type of credit is commonly used for big ticket things like mortgages or car loans.

Payments typically stay the same amount from month to month.

Answer 1

The statement that is true about open-end credit is:

It is not typically used for a single purchase but for many purchases over a period of time.

Open-end credit, such as credit cards, allows consumers to borrow funds up to a certain limit and pay it back over time, making it ideal for multiple purchases rather than a single large purchase. The other statements either describe closed-end credit or do not accurately characterize open-end credit. For instance, a consumer loan generally refers to a closed-end credit arrangement, and payments on open-end credit can vary based on usage and outstanding balance.