Line of Credit

A line of credit is a type of loan that allows you to borrow money up to a certain credit limit and repay it over time, similar to a credit card.

However, lines of credit typically offer lower interest rates than credit cards.

Lines of credit can be secured, meaning they are backed by an asset such as your home, or unsecured. They are often used for purposes such as consolidating debt, financing home renovations, or covering unexpected expenses.

You only pay interest on the amount you borrow, and you can repay the loan over time according to the terms of the agreement. Managing a line of credit responsibly is crucial to avoid debt problems.

• Related Terms: Loan, Credit, Interest Rate, Debt, Secured Loan, Unsecured Loan