What is a Personal Line of Credit?
With a personal line of credit, your checking account becomes your own pre-approved loan. Applying for a personal line of credit is similar to applying for a loan. You can use the extra funds as you wish by simply writing out a check up to the pre-approved limit. This loan also protects you from embarrassing overdraft charges by automatically transferring funds from your line of credit into your checking account. Paying back the line is simple. On the date your statement is prepared, a monthly payment will automatically be deducted from your balance, or you can make payments at your convenience at your local office.
A personal line of credit, similar to a credit card but often at a lower interest rate, has a set amount that you can borrow and use as you please, although the amount must be paid back by a specific time at a variable interest rate. You can compare this option to credit card offers and see which interest rate is lowest. Be mindful that many credit cards come with an initial interest rate that will increase after an introductory period. You can use the money borrowed from the loan or line of credit for minor home repairs, to buy a boat, motor home, farm equipment or motorcycle; purchase a computer; or pay for a vacation. It can put some extra money in your pocket when you need it, as long as you realize you are paying it back, plus more, over time. Are there any downsides? A personal loan or line of credit is “unsecured,” meaning there is no collateral backing up the money. Because this is riskier for the lender, such borrowing often comes with stricter eligibility requirements and hig
A personal line of credit is an unsecured revolving line of credit which applicants can use in a variety of ways. Personal lines of credit are extended through banks, and they are often linked with checking accounts, so that applicants can use the personal line of credit as an extension of their regular bank account. The amount of the credit line varies, depending on the bank and the credit history of the applicant. Unsecured lines of credit are lines of credit which are provided without the need for collateral. Credit cards, for example, are often unsecured, by contrast with home loans, which use the home itself as collateral for the loan. Revolving lines of credit are lines of credit with a revolving balance and payment, rather than a fixed rate of payment. Personal lines of credit can be used for things like buying a new car, purchasing furniture, or dealing with other life expenses. As soon as a personal line of credit is activated, the recipient begins to receive monthly statement
