March 31, 2022

Revolving Loans Guide

Carla McMorris

How revolving loans give consumers access to their money when they need it 

Consumers borrow money for various reasons and often need access to a line of credit on a recurring basis. Learn how revolving loans are useful to pay for recurring expenses or bigger expenditures when they may not have the cash on hand to cover.

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What is a revolving loan?

With a revolving loan, the user can repeatedly borrow up to a preset credit or borrowing limit, pay off all or some of the debt, and then borrow again. Americans held about $830 billion in revolving debt as of March 2022, according to the Federal Reserve.

What are the different types of revolving loans?

There are a variety of revolving loans, also known as revolving lines of credit. Examples include credit cards, home equity lines of credit (or HELOCs), and revolving lines of credit. Like HELOCs, some of these loans are secured by collateral, while credit cards and revolving loans can be secured or unsecured. 

How do revolving loans differ from other types of credit or loans?

Revolving credit or a revolving loan allows a consumer to borrow money up to a set credit limit, repay some or all of that debt, and then borrow again up to the credit limit. Many consumers use credit cards for smaller everyday purchases and turn to HELOCs and lines of credit for bigger expenditures like funding home remodel. These loans are also customizable for the loan provider who can offer a cap on accrued interest as well as withhold late fees.


Revolving loans are different from installment loans. An installment loan or line of credit lets a consumer borrow a set amount of money once and repay it over time in installments. The repayment period can stretch for years and usually requires a monthly fixed payment. The consumer will receive all the money they are borrowing at one time. Examples of installment debt include home mortgages and student loans. Once the borrower repays the debt with an installment loan, they would need to reapply for a new loan to access money.

Why should fintechs offer revolving lines of credit?

Many fintechs and neobanks strive to bring credit to under-represented groups. Offering revolving debt such as credit cards or personal lines of credit can help qualified, but perhaps underserved consumers access money when needed and build up their credit scores at the same time. 

How do revolving loans help consumers build up their credit scores?

Revolving credit or revolving loans, such as credit cards can help consumers build up their credit score when the issuer reports the payment history: When consumers make payments on time it helps result in a positive payment history, which can increase their credit score.

What services do providers of neobanks and other fintechs require to offer revolving loans?

Building a feature-rich lending experience for consumers can be challenging for fintechs. It requires providing a wide variety of loan types, reserve requirements, governance limits, underwriting logic, and lender licensing. Therefore, Fintechs should consider working with a trusted partner who can help provide the underlying building blocks and serve as a built-in lender or record. 

Synapse’s Credit Hub* allows fintechs and neobanks to provide credit product experiences, including revolving loans. Build products for individuals or businesses in weeks, with the ease of API calls and Synapse Credit LLC as your built-in lender of record. Learn more about our lending and credit solutions.

*Synapse Financial Technologies, Inc. is not a Bank.


Deposit, Banking and Card services are provided by Synapse Financial Technologies,

Inc.’s partner banks.


Credit services are provided by Synapse Credit LLC, a licensed U.S. lender in 

designated States.

Revolving Loans Guide

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Carla McMorris
March 31, 2022

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