Revolving accounts VS installment accounts

There are two main types of credit accounts: revolving accounts and installment accounts.

Revolving accounts are like credit cards. You can use them multiple times as long as you pay them off each month. They don't have an expiration date. But be careful, having too many revolving accounts can make it harder to get approved for new ones.

Installment accounts are loans. They give you a lump sum of money upfront and you have to pay it back over a set period of time. Once you pay off the loan, it's closed and you can't use it again.

Now, let's talk about the best type of account. It really depends on what you need. If you want easy access to cash, a line of credit (LOC) might be the best choice. It's like having a checking account full of money that you can use whenever you want. But if you want rewards and perks, a credit card is a good option.

When it comes to paying off debt, it's generally better to prioritize paying off loan debt over credit card debt. Loan debt is treated differently and doesn't impact your credit utilization rate as much as credit card debt does.

If you have a lot of credit card debt and want to simplify your payments, you might consider getting a consolidation loan. This loan combines all your credit card balances into one payment. Just remember not to close the credit card accounts after consolidating the debt, as that could hurt your credit age.

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