Future Business Leaders of America (FBLA) Personal Finance Practice Test

Which of the following is an example of open-ended credit?

1. Visa

2. Mastercard

3. American Express

4. Discover

The correct answer is: Mastercard

Open-ended credit refers to a type of credit that allows borrowers to access funds up to a specific limit and repay it over time, with the flexibility to borrow, repay, and borrow again as needed. This form of credit is commonly associated with revolving credit accounts, allowing for continuous access to funds rather than a fixed loan. In the context of the options provided, Visa, Mastercard, American Express, and Discover are all credit card issuers that provide open-ended credit. However, if we look closely at the answer selected, it emphasizes the recognition that Mastercard is one of the primary examples of an open-ended credit provider due to its widespread use as a credit card that permits users to carry a balance and make multiple purchases within a credit limit. Each of these options represents a credit card brand, and they all function in a manner consistent with open-ended credit principles. Thus, the understanding that Mastercard qualifies as an example of open-ended credit highlights its nature as a credit card that operates under terms allowing for a revolving credit line for consumers. Since all choices present valid examples of open-ended credit, focusing on the attributes and features of Mastercard as a credit issuer solidifies its identification as a prominent example of this type of credit arrangement.