Meaning & use
credit term
Last updated
Meanings
nouncountablebusinessfinance
A condition agreed between a seller and a buyer about when and how payment for goods must be made.
Grammar: Countable, and most often used in the plural: agree on credit terms.
Patterns
- agree on credit terms
- offer someone credit terms
- credit terms of something
The supplier offers thirty-day credit terms to regular customers.
Before signing, check the credit terms carefully so you know when payment is due.
We negotiated longer credit terms because our own customers pay slowly.
nouncountablefinance
The length of time a borrower has to repay a loan or the period during which interest is charged.
Grammar: Countable; often appears with a number of months or years: a five-year credit term.
Patterns
- a short credit term
- a long credit term
- over the credit term
The bank set a ten-year credit term for the mortgage.
A shorter credit term means higher monthly payments but less total interest.
Interest is calculated over the whole credit term, not just the first year.
Word forms
| plural | credit terms |
|---|
Common combinations
- agree on credit terms
- The two companies finally agreed on credit terms of sixty days.
- offer credit terms
- Small shops rarely offer credit terms to new customers.
- extend credit terms
- The seller agreed to extend credit terms during the busy season.
- favorable credit terms
- Large buyers can usually get more favorable credit terms.
- short credit term
- A short credit term puts pressure on the buyer's cash flow.
Synonyms and how they differ
- payment terms
- A wider phrase that also covers how payment is made, not only when it is due.
- credit period
- Focuses only on the length of time allowed before payment; it does not cover the other conditions.
Word family
Commonly confused: credit term or credit line? credit term or term?
credit term vs credit line
A credit line is the maximum amount you may borrow, while a credit term is a condition about when to pay.
credit term vs term
'Term' alone can mean a word, a school period, or a fixed length of time; 'credit term' is only about payment conditions.
Practice
The supplier agreed to extend the ___ so we can pay after ninety days instead of thirty.
Choose one answer.
'Credit terms' are the conditions about when payment is due, so extending them fits the idea of paying later. 'Credit lines' are borrowing limits, 'credit ratings' measure how safe a borrower is, and 'credit notes' are documents reducing an amount owed, so none of those fits the time period.
Make it your own
Write a sentence using “credit term”, then check it and compare it with the examples above.