What Is a Line of Credit?
A line of credit is a flexible borrowing arrangement that lets a borrower draw money as needed up to a set limit, repay it, and borrow again. Interest is charged only on the amount drawn. Lines of credit can be unsecured or secured, as with a home equity line of credit (HELOC).
Line of Credit vs. Loan
A term loan gives the full amount at once and is repaid on a fixed schedule. A line of credit is revolving and often has a variable interest rate.
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🔗 Related Terms
More Loans & Credit Terms
- Amortization
- APR (Annual Percentage Rate)
- Auto Loan
- Balance Transfer
- Balloon Payment
- Buy Now, Pay Later (BNPL)
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Last updated: September 27, 2026. This definition is for general educational purposes only. It is not financial, investment, tax, legal, or medical advice, and it does not recommend any product or course of action. For decisions about your own situation, consult a qualified professional.