There are two types of credit – revolving and installment credit. The second type, revolving, is also known as open-end credit, and can be used repeatedly for purchases. You'll pay back the debt each month or be charged interest on the expenses (usually, this is an interest rate that is quite high).
Credit cards are the most common type of revolving credit, but HELOC (home equity line of credit) loans are another example.
Installment credit is also known as closed-end credit. You will borrow a single sum and be responsible for paying it back over a period of time. Once your loan is paid off, the account closes. Examples are mortgages and auto loans.
There is another type of credit you can apply for, too – and it's one that's often not grouped into revolving or installment categories because it's a bit different. That is open credit – this is a type of credit in which your monthly payments aren't always the same but the balances are due in full when the billing cycle ends.
They differ from revolving loans because you must pay the amount in full within a few days of receiving the bill. Unlike a credit card, which only requires the minimum payment (usually around $25), you'll have to pay everything that is owed. An example is an electric bill.