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What is the meaning of a Line of Credit?




A line of credit at a bank may be very small or very large depending on some things. Say you have $ 1000 credit line, basically a place where you can drag and drop the money you need regardless of the amount and put it in your regular account. Then, each month to repay the money and keep the loans if necessary.

This is a loan.

One with an open-ended amount, but usually with an upper limit. You can borrow from it by checking on it, or whatever agreement provides the bank or lender. Interest is charged on it underwith current / monthly balance (checkyour particular agreement for details ). They also differ in the required repayment schedules.

The advantage

Is that you're only charged interest on what you borrow, the time to borrow.

The disadvantage

Is that generally have a higher interest rate due to the uncertainty of how much the lender will be performed at a given time, making it more difficult for them to plan their finances.

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