The Difference Between Credit Cards, Personal Loans, and a Personal Line of Credit

lifehacker.com
2 min read
fairly easy
Although they're similar, these types of credit aren't the same.
Most people know how credit cards work, and they might be familiar with personal loans, too—but what about a personal line of credit? All these options are similar, but they have subtle differences that can affect which one you might choose when you need to borrow money. Here's a look at when you'd use a line of credit over a credit card or personal loan.

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What's a personal line of credit?

Personal lines of credit are open-ended loans that allow a borrower to withdraw funds as needed, over a fixed period of time, for limits that range from $1,000 to $100,000. Unlike a personal loan, this type of credit lets access funds multiple times rather than getting the money upfront as a lump sum. Interest accrues once funds are withdrawn, with borrowers making minimum monthly payments like a credit card.

Personal lines of credit are typically unsecured (which means that your property isn't used as collateral) and have a…
Mike Winters
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