Personal Loans Vs. Lines of Credit Explained | Life With Amex | Amex CA

A line of credit is a lending option that allows you to borrow from it as needed, but there is an assigned limit on the amount of funds available. You only pay interest on the money that you borrow, and you can borrow up to the available credit limit. As you pay back the money, the line of credit is replenished. You might be able to qualify for an unsecured personal line of credit, much like an unsecured personal loan which does not require any collateral. If not, you will be required to secure the funds by putting up collateral, like your home or vehicle, for example. With lines of credit, interest rates generally vary. You can pay your minimum payment monthly to revolve on your balance, however you would continue to accrue interest. A Line of Credit can be a flexible option if you have unforeseen expenses and allows you to make the minimum payment where there is no fixed term.