 TITLE: What Is Consumer Credit? CONTENT: What Are the Main Types of Consumer Credit?\n-------------------------------------------\nThere are two broad ways consumer credit is categorized: how it's paid back (revolving vs. installment), and whether it requires collateral (secured vs. unsecured). The credit types you use—whether it's personal loans, credit cards or mortgages—fit into these categories. It's likely that you've got both installment and revolving credit as well as secured and unsecured credit.\n### Revolving and Installment Credit\nInstallment credit typically refers to loans, such as mortgages, auto loans, personal loans and student loans. With installment credit, you repay what you borrow in fixed payments made each month over a set period of time, or term. The monthly payments, or installments, are based on the amount you borrow plus the interest you owe.\nWith revolving credit, you can borrow money numerous times a month as long as you stay below your credit limit. You'll have to make at least a minimum monthly payment on revolving credit on or before the account's due date. The amount of your monthly payment will depend on how much money you've borrowed and whether you regularly pay off the full balance to avoid interest changes. If you don't pay off your debt immediately, it rolls over—or \"revolves\"—to the next billing period.\nThe most familiar and common type of revolving credit is a credit card. Two other kinds of revolving credit are personal lines of credit and home equity lines of credit (HELOCs).\n### Secured and Unsecured Credit\nSecured debt is backed by collateral—such as a home, car or cash deposit—that a lender can take to cover your debt if you fail to pay back the loan. Types of secured credit include mortgages, auto loans and secured credit cards.\nUnsecured debt does not involve collateral. Credit cards, personal loans and student loans are often unsecured, and are lent primarily on the basis of someone's creditworthiness. When a lender extends unsecured credit, it typically charges a higher interest rate than it would for secured credit. That's because a lender assumes more risk with unsecured credit than secured credit. END