Which type has a minimum payment?
resolving credit
installment credit
Resolving credit typically has a minimum payment, whereas installment credit does not necessarily have a minimum payment.
The type that typically has a minimum payment is revolving credit. Revolving credit is a type of credit that does not have a fixed number of payments and allows the borrower to make minimum payments each month, typically calculated as a percentage of the outstanding balance. On the other hand, installment credit requires a fixed number of payments of equal amounts over a specified period, such as a car loan or a mortgage, and the payment amount is typically predetermined and not subject to change.
The type of credit that typically has a minimum payment is installment credit.
To find this answer, you can start by understanding the difference between resolving credit and installment credit.
Resolving credit, also known as revolving credit, refers to a type of credit where you are given a maximum credit limit and you can borrow up to that limit. Examples of resolving credit include credit cards and lines of credit. With resolving credit, you have the flexibility to make a range of payment amounts each month, depending on your outstanding balance.
On the other hand, installment credit refers to a type of credit where you borrow a specific amount of money and repay it over a fixed period of time with regular payments. Examples of installment credit include mortgages, auto loans, and personal loans. With installment credit, the borrower typically agrees to make regular fixed payments until the loan is fully paid off.
Now, when it comes to a minimum payment, it is usually associated with installment credit. When you have an installment loan, such as a mortgage or a car loan, your lender will typically require you to make a minimum payment each month. This minimum payment is usually a set amount or a percentage of the outstanding balance, and it ensures that you are making progress towards paying off the loan.
In contrast, resolving credit (such as credit cards) often have a minimum payment requirement as well, but unlike installment credit, you usually have the flexibility to decide how much you want to pay, as long as it meets the minimum payment requirement set by your credit card issuer. However, paying only the minimum required amount on a credit card can result in high interest charges and a longer time to pay off the debt.
Therefore, to answer your question, installment credit is the type of credit that typically has a minimum payment.