Business & Finance Loans

What Is the Purpose of a Line of Credit?

By Business & Finance Last updated Monday, July/29/2024

A Pre-Approved Loan

The line of credit costs nothing until withdrawals are made. After that, it can be repaid in monthly installments or all at once.

Another Credit Source

Some borrowers like the line of credit because it allows them to use their credit cards for day-to-day purchases, while reserving the line of credit for big-ticket items.

Bill Consolidation

Other people use their line of credit to pay off high interest rate credit card bills and other debts. That may result in a lower overall monthly payment, as well as significant savings on finance charges.

Great for Seasonal Workers

The line of credit can be excellent for temporary or seasonal workers, giving them access to cash for living expenses until they resume working.

Tax Time

Many consumers also tap into their credit lines to pay property taxes or federal income taxes. They appreciate the peace of mind that comes with knowing the credit line will be there when they need it.

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