What is the term for a credit arrangement that allows borrowing against a pre-approved line of credit?

The correct term for a credit arrangement that allows borrowing against a pre-approved line of credit is "revolving debt." This type of debt enables borrowers to access funds repeatedly up to a certain limit without the need to apply for new credit each time. The borrower can use the credit as needed, repay it, and then borrow again, which offers flexibility in managing cash flow.

Revolving debt is commonly associated with credit cards and lines of credit, where the amount available can fluctuate based on how much has been borrowed and repaid. This contrasts with installment debt, which typically involves a fixed loan amount to be repaid over a set period with regular payments. Secured debt refers to loans that are backed by collateral, while unsecured debt does not have collateral backing it. Understanding these distinctions helps clarify why revolving debt specifically fits the description given in the question.