Revocable Line Of Credit

A source of credit provided to an individual or business by a bank or financial institution, which can be revoked or annulled at the lender's discretion or under specific circumstances. A bank or financial institution may revoke a line of credit if the customer's financial circumstances deteriorate markedly, or if market conditions turn so adverse as to warrant revocation, such as in the aftermath of the 2008 global credit crisis. A revocable line of credit can be unsecured or secured, with the former generally carrying a higher rate of interest than the latter.

Notwithstanding its revocable nature, such a line of credit offers a bank's clients financial flexibility since interest is paid only on the actual amount of funds drawn down. Another attractive feature of this line of credit is its revolving nature, with the full amount being available to the client once all advances under it have been repaid.

Home Equity Lines of Credit (HELOCs) were very popular in North America during the real estate boom of 2002-06. However, as housing prices collapsed and homeowners' equity shrank drastically, some lenders increasingly resorted to reductions and revocations of such credit facilities.


Investment dictionary. . 2012.

Look at other dictionaries:

  • credit — an entry made on the right hand side of an account and indicating a gain to a liability, owner s equity or revenue account. Glossary of Business Terms money loaned. Bloomberg Financial Dictionary * * * ▪ I. credit cred‧it 1 [ˈkredt] noun 1.… …   Financial and business terms

  • Credit — Money loaned. The New York Times Financial Glossary * * * ▪ I. credit cred‧it 1 [ˈkredt] noun 1. [uncountable] COMMERCE an arrangement with a shop, supplier etc to buy something now and pay for it later: • They are saving for new furniture… …   Financial and business terms

  • credit — The ability of a business or person to borrow money, or obtain goods on time, in consequence of the favorable opinion held by the particular lender as to solvency and past history of reliability. In re Ford, B.C.Wash., 14 F.2d 848, 849.… …   Black's law dictionary

  • revolving credit — re·volv·ing credit n: a credit which may be used repeatedly up to the limit specified after partial or total repayments have been made Merriam Webster’s Dictionary of Law. Merriam Webster. 1996. revolving credit …   Law dictionary

  • Net Stable Funding Ratio — During the 2007 banking crisis, banks such as Northern Rock in the UK, and US investment banks such as Bear Stearns and Lehman Brothers suffered a bank run and/or collapsed, due to their over reliance on short term wholesale funding from the… …   Wikipedia

  • trust — A legal entity created by a grantor for the benefit of designated beneficiaries under the laws of the state and the valid trust instrument. The trustee holds a fiduciary responsibility to manage the trust s corpus assets and income for the… …   Black's law dictionary

  • Europe, history of — Introduction       history of European peoples and cultures from prehistoric times to the present. Europe is a more ambiguous term than most geographic expressions. Its etymology is doubtful, as is the physical extent of the area it designates.… …   Universalium

  • property law — Introduction       principles, policies, and rules by which disputes over property are to be resolved and by which property transactions may be structured. What distinguishes property law from other kinds of law is that property law deals with… …   Universalium

  • contract — contractee, n. contractible, adj. contractibility, contractibleness, n. contractibly, adv. n., adj., and usu. for v. 16 18, 22, 23 /kon trakt/; otherwise v. /keuhn trakt /, n. 1. an agreement between two or more parties for the doing or not doing …   Universalium

  • inheritance — /in her i teuhns/, n. 1. something that is or may be inherited; property passing at the owner s death to the heir or those entitled to succeed; legacy. 2. the genetic characters transmitted from parent to offspring, taken collectively. 3.… …   Universalium

Share the article and excerpts

Direct link
Do a right-click on the link above
and select “Copy Link”

We are using cookies for the best presentation of our site. Continuing to use this site, you agree with this.