What is a Credit Line?
A credit line is money available for you to borrow. Instead of borrowing a specific amount of money and paying it back over time, the bank allows you to borrow any amount you need (up to your credit limit), whenever you need it.
Contrast the credit line to a loan, where you borrow a fixed amount of money and start paying back the loan (or 'amortizing') with each payment.
What is a Credit Line Good For?
Credit lines are nice because they’re flexible. You don’t have to apply for a new loan every time you need money. Instead, you get a credit line that allows you to borrow money as needed.
If you need $1000 for a repair and you have a credit line, you can just write a check against the credit line. If you never need any money, you avoid taking out a loan and paying interest on money that you didn’t need to borrow.
Examples
Now that you know the basics, see some examples of what a credit line looks like in practice:
