A personal line of credit can help with unforeseen bills, emergency repairs, and filling temporary gaps in cash flow. It’s a debt instrument that provides access to a pool of funds from which you can borrow whenever you require cash.
Similar to a credit card, a personal line of credit allows you to withdraw and repay funds throughout the duration of the loan..
What Exactly Is A Personal Line of Credit?
A personal line of credit (PLOC) is a revolving account with a variable interest rate that is unsecured. It’s a loan you can use as needed and pay back with interest, similar to a credit card. It can be a feasible choice for managing your daily financial flow, especially if your income isn’t always consistent or you confront an unexpected bill.
Advantages Of Personal Lines Of Credit For Your Financial Strategy
- Rapid Access To Funding
You can borrow money from a personal line of credit as needed. Depending on your lender, you can get the line of credit through a credit union/bank branch, online, or via a mobile app.
- Rates That Are Competitive With Credit Cards
Rates on a personal line of credit are often lower than those on a credit card. However, the interest rate on your PLOC will vary based on your lender and personal credit history.
- There Is No Need For Collateral
While other choices, such as home equity lines of credit, use your home equity as security, a PLOC does not. If you don’t have a home or a car to use as collateral, this can be an excellent option.
- Pay Just For The Draws You Make
With a PLOC, you won’t have to pay anything until you use your funds. You can take out any money up to your limit, and you’ll only be charged for the amount you take out plus interest.
A personal line of credit works like a credit card. You can open it for easy access to money you may need and use it repeatedly. This way of borrowing money has many benefits, such as giving you quick access to cash and lower rates than credit cards.
But keep in mind that not everyone may want this kind of account. To qualify, you’ll need a good credit history; if you don’t have one, you might borrow more than you can pay back. If you decide to open a personal line of credit, visit Heritage Financial Credit Union to shop around to find the best rate and terms for your financial needs.