A line of credit is a flexible way to borrow money when you don’t need it all at once. It’s different from a loan – you can borrow, repay, and borrow again, like a financial safety net. Here’s how it works and when it makes sense.
✅ 5 Key Facts About Lines of Credit:
- You get approved for a maximum amount, but only pay interest on what you actually use.
- It’s reusable — repay what you used, and the money becomes available again.
- Interest rates are often lower than credit cards, but higher than personal loans.
- It’s great for irregular expenses — home repairs, business costs, or school fees.
- You need good credit to qualify, and repayment discipline is key.
👉 A line of credit gives you borrowing power on standby — just don’t treat it like free money.