What is a personal line of credit? Is it better than a loan?
With a loan, you get a lump sum of money and begin accruing interest right away on the total sum. It’s good if you need a large amount of money, such as for buying a home. With a line of credit, you only draw out the amount of money you need. Payback is as flexible as withdrawal. You will pay interest only on what you borrow, so if you don’t borrow you won’t owe anything. A line of credit is the way to go for people who will be borrowing irregular amounts to pay college tuition or to buy a new car.
