Open end credit

Consumer credit covers many short and intermediate-term credit extended to individuals that include revolving credit (related to the credit card and balance outstanding on unsecured lines of credit) and non-revolving credit like secured and unsecured credits for automobiles, trailers, mobile homes, durable goods, other purposes and vacations. Consumer credit excludes loans related to real estates like mortgage, home equity and others).

Revolving consumer credit is called "open-end" and non-revolving is referred to as closed-end.

An open-end transaction is the one where it is likely to repeat transactions where the creditors may impose a finance charge on the outstanding balance and the amount of credit or a limit-less amount is generally available to the borrower at any time during the term.

Such terms are used in Regulation Z where the financial regulation define consumer credit extended under a plan where the creditor may impose a financial charge from time to time on an outstanding unpaid balance and the amount of credit may be extended to the consumer during the term of the plan.

In such transactions, the creditor must make certain disclosures where they need to provide details in writing in a form.

One such transaction is the home equity line of credit and another is a credit card. Such transactions need the user to give disclosures or to apply to open the account where they provide the following details.

• The annual % rate of interest
• The yearly/ periodic fee – based on account activity and inactivity
• The minimum or fixed charges imposed on the billing cycle
• Any transaction charges imposed for the use of the card for purchases
• Any cash advance / late payment or fee for charging over one's credit limit
• The grace period during which credit money used for purchases may be repaid with-out additional charges. ( If the length of grace period varies, the card issuer must dis-close the range of days, the minimum number of days, and the average number of days in the grace period.)
• The issuer must identify the method used to calculate the outstanding balance on the card that is discounted or given on initial premium rates and the period after which they will change.
• They need to mention the security risk or possible actions taken by the creditors to re-port credit card fraud.

The billing statement includes

• The balance/history of the billing cycle
• Date of transactions
• Credit to the account during the financial period and the interest rates used to com-pute the money.
• The charges and the closing date of the billing cycle
• The account balance outstanding on the closing date of the financial period
• The warning advisory to consumers

The user gets billing rights – where they can dispute the information on the card bill in 60 days (limited period) where the notice must include the name, account details and error amount.

Many such lenders provide attractive benefits like travel discounts and extra protection of the lost or stolen items to encourage the use of such cards.