Personal Line of Credit vs. Credit Card

A personal line of credit is revolving credit from a bank, credit union, or another issuer. You can borrow as much as you need at once and up to an agreed-upon limit, and only the borrowed amount will be charged with interest. Purchases can be done through writing checks or by using a special card. There is no grace period on a personal credit line, so on every purchase interest is charged.


For cash needs, just do a withdrawal from the bank account transaction or wire transfer without paying a fee on top of interest charges.


How is a personal line of credit different from credit cards?

A personal line of credit comes with a prefixed withdrawal time, during this period you can make any payments for purchasing something or using it for some other purpose. The draw periods usually last for longer years but this may depend on the lenders. If you are left with a payable amount after your draw period ends, you’ll have to repay that amount in a fixed period.

Interest rates on a personal line of credit are generally lower than for credit cards. Personal line of credit can give you a higher borrowing limit and this may benefit you if you have ongoing big projects such as home renovations. 

Benefits of a personal line of credit and credit cards

Personal line of credit and credit cards can both let you borrow money up to your credit limit and if you want to increase your credit limit, you should pay your balance on time. You’ll typically need a good credit score to qualify for these products, especially if you’re applying for an unsecured personal line of credit.

Credit cards also come with a grace period on interest; you can avoid excess charges of interest on purchases by paying off your balance before this period ends. Also, the rewards such as cash-backs or miles make it a preferable option.

For getting a personal line of credit, you can do the following things that will help you in getting approved:

Check and improve your credit score

The first thing any lender does is checking the credit score. This score tells your creditworthiness. Since these are unsecured credits, no assets are attached and therefore your creditworthiness is the only way for a lender to get assured regarding the repayments.

Compare different lenders

There are many lenders in the market, this increases the competition and you can get benefits out of it. Try comparing different lenders, their charges, and rate of interest. And then ultimately you can now apply and negotiate on the cost based on your credit score and repayment capability.


Both credit cards and personal lines of credit are available to you as a source of funds, you just need to know what you will need in certain situations. Keeping in mind the above points you can choose the best among both for you. You should check all the points and make a decision that will be beneficial to you.