Do you know what open account means?

Open account have pre-approved credit limits that allow you to have an outstanding revolving balance at any given time. You must pay a low minimum balance before the due date. Transactions that exceed the pre-approved limit are generally declined and not processed.

These accounts give you more flexibility in how much you borrow at a time. You can use a little or a lot of the credit that is available to you, depending on what you need. You also have flexibility in how you repay what you borrow.

Among the open accounts available to you are:
The famous credit cards.
Home Equity Lines of Credit
Unsecured lines of credit

Some accounts have a grace period, which means no interest is charged if payment is made in full in one cycle. Arguably, it is normal for credit card interest rates to be higher for cash advances than for purchases.

With an open account, you are allowed to use as much of your approved limit as you choose, as long as you pay back as you reduce it. If you fall behind, your account will go into past due status. The creditor will take steps to bring your account current.

They will call you, send you letters and report your late payments to the credit bureaus. This can affect your credit score and result in higher interest rates than on other credit cards you may have.

Installment loans, such as auto loans, are another way to borrow money. Generally, these types of loans charge interest on the total amount borrowed and do not offer the flexibility of variable repayment. Also, once you have paid it back, there is no option to borrow again.

You should keep in mind, just because you have easy access does not mean you should spend without limit, as this can lead to overspending and then becoming involved in debt that is difficult to pay off.
Missed payments on open accounts can trigger penalty fees and a sharp increase in the interest rate charged. The creditor will also report your late payments to the credit bureaus, which will affect your credit score.

Missed payments weigh heavily in how your score is calculated, and a lower score affects your ability to borrow in the future.

An account that is past due will ask the creditor to take steps to bring the account current. It will call you and send you letters, as well as report your late payments to the credit bureaus. This may also affect the interest rates on other credit cards you have.

After a certain number of missed payments with no indication that you will become current, your account will go into default and be frozen by the lender. The clock for the statute of limitations starts ticking when there is no longer any activity on your account. Some creditors will sue you for the unpaid debt, but they must do so before the statute of limitations runs out.