While a personal line of credit is more commonly categorized as a loan, in reality, it functions more like a credit card. That’s because a line of credit is a form of revolving debt, in which the money you borrow is paid back... only to be borrowed again. There are other similarities between a line of credit and credit card, however, there are also some key differences. Understanding how these two financial products compare and contrast will help in determining which option is the best for a consumer’s personal needs.
For most American consumers, borrowing money can mean a few different things. Technically, anyone using a credit card is borrowing funds that need to be paid back on a monthly basis, to avoid interest charges and other fees. There is also the personal loan, a handy financial tool that allows borrowers to obtain a lump sum and repay the debt in fixed monthly installments.