Line of Credit

A line of credit is a type of revolving credit account that allows a borrower to draw funds up to a set limit. Interest is charged only on the amount used, not the full limit.

Lines of credit can be secured or unsecured and are often used for cash flow management. Available credit replenishes as the borrower repays the balance. A common home-secured line is a HELOC.

Related Terms

Credit

In banking, a credit is a transaction that increases the balance in your account. On your bank state...

Credit Limit

A credit limit is the maximum amount a borrower can use on a revolving credit account. It applies to...

Interest

Interest is the cost of borrowing money or the return earned on deposited funds, typically expressed...

Secured Loan

A secured loan is backed by collateral such as a home or vehicle. If the borrower defaults, the lend...

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