Hey
Everybody wants to be financially independent and debt free. Sometimes it becomes necessary to borrow money. Taking a loan from a bank/ institution/ informal resource can help us move one step closer to achieving our dreams. If you wish to know the line of credit vs credit card, keep reading.
Get loans from the safest banks in India on NoBroker at the lowest interest rates. Click here to pay your utility bills using credit cards through NoBroker and earn reward points on your card. What is a line of credit vs credit card?Line of credit and credit cards are methods to take short-term loans/ borrow money from a bank. Both of them are examples of revolving credit. The borrower can access credit as needed up to a preset limit.
Take a look at the table to know the differences between the two.
|
Personal line of credit |
Credit card |
Purpose |
Longer-term financing. K–12 education costs, home repairs, family planning and medical expenses. Can also be used to refinance debt such as student loans and auto loans. |
Short-term payment tool for everyday expenses, as well as to finance consumer goods and services such as electronics and vacations. |
Average interest rates (APR) |
9.30% - 17.55%, Variable (based on Prime Rate) |
16.11% (national average) |
Typical fees |
Varies by bank. May include an annual fee for maintenance, and a fee for paying late. |
Varies by issuer. May include an annual fee, and fees for exceeding the limit, paying late, transferring a balance, taking out a cash advance and making foreign transactions. |
Repayment |
After withdrawing funds, a minimum monthly payment is due. Payments may be calculated as a percentage of the outstanding balance (interest plus principal) or may be interest only. If a debt remains after the draw period ends, instalment payments are calculated. |
After charging, the issuer calculates the minimum monthly payment based on the balance and the interest rate. |
Application |
Qualification depends on credit history, credit score, as well as income and household expenses. Good to excellent credit is usually expected. |
Qualification depends on credit history and credit score, income and household expenses. |
Draw period |
Has a finite draw period |
Has an infinite draw period (the time frame during which funds can be withdrawn) |
This is all from my end on line of credit vs credit card.
Read more:
What happens if unsecured loan is not paid? How no cost EMI works on credit card? What Is A PIK Loan? What Is The Minimum CIBIL Score Required For A Home Loan?
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What is a line of credit vs credit card?
Ambar
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2022-12-21T08:57:07+00:00 2022-12-21T16:50:44+00:00Comment
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