A line of credit is a little like a mix of a credit card and a bank account. Like a credit card, a line of credit is a type of unsecured loan. You have a credit limit (just as with a credit card) that you can borrow against. Just like a bank account, however, you can withdraw money from your line of credit at an ATM. You can even write a check, usually, for your line of credit. The nice advantage is that lines of credit usually have more attractive interest rates than credit cards, especially if you get a secured line of credit.
Many people with uncertain incomes like to have a line of credit. If you are self-employed or work on commission, for example, your monthly wage might fluctuate a lot. A line of credit gives you cash when you need it and when you get a more prosperous month, you can pay off your debt amount again. Many people also like to have a line of credit when they know they will face upcoming big expenses but aren’t sure how much they will eventually spend. For example, if you are working your way through school and will need some money but don’t want student loans, a combination of work, scholarships, and a line of credit might help. If you are completing renovations to your home, a line of credit can be an affordable way to borrow money for your project.…