A line of credit can be a good choice when you need to tackle a large expense — and want to avoid the high rates of credit cards. We compared eight lenders, considering factors like fees, line limits and APR. Other factors, like funding speed and the need for collateral, were also taken into account to help you find the best line of credit for your finances.
Upgrade's line of credit is actually available on a card: the Upgrade Card. Each draw is considered a loan — which means your APR will vary every time you borrow as your debt-to-income ratio, credit score and income change. It's open to borrowers with fair credit, though it likely isn't the best idea if you're consolidating your debt, since APRs can reach as high as 29.99%.
Not available in: Colorado, Idaho, New York, Vermont, Virginia, Wisconsin, Wyoming
No origination fees
Rewards available on some cards
Receive a physical card — similar to a credit card
PenFed is one of the best credit unions out there — and its personal lines of credit match. While they're on the smaller end, PenFed is one of the few options that offers fixed-rate lines. This does mean a higher minimum APR — 14.65%, to be exact. But it's not a bad trade off for the convenience of stable monthly payments.
While U.S. Bank lines of credit are only available to current account holders, it’s still the best option from a bank out there. There are no annual fees, and the variable APR is a low 10.25%. You’ll also have flexible access to your funds: U.S. Bank issues borrowers a Visa Access Card and personal checks, and you'll be able to make a draw online, in the U.S. Bank mobile app or at a branch.
Available in all states
Flexible ways to make draws
Unsecured LOC that doesn't require collateral
Limited to current U.S. Bank customers
Doesn't disclose draw and repayment periods online
Elastic offers a line of credit that could be a cheaper alternative to a high-cost payday loan if you use it wisely. While your credit line is limited to anywhere from $500 to $4,500, that's not necessarily a bad thing. It can help you pay for short-term expenses without racking up thousands of dollars in excess debt. Instead of charging interest, it charges a 5% to 10% cash advance fee for each draw, as well as a carried balance fee that ranges from $5 to $350 each month. Paying off your balance as quickly as possible can help keep the cost from equaling an APR in the triple digits.
Not available in: Colorado, Connecticut, Georgia, Hawaii, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Vermont, Virginia, West Virginia
Open to all credit types
Employment isn't required — will accept government benefits as income
Wide state availability
Cash advance fee for each draw
Carried balance fee on repayments
Cooling off period after carrying a balance for 10+ months
Tally is an app that offers a line of credit designed to help you pay down your credit cards. It accepts borrowers with fair credit, and you’ll have access to an automated Tally Advisor that will help you develop a strategy to pay down your debt and save money on interest. You can also have the app take over managing your credit card payments, which comes with late fee protection. This can help you save on pesky fees and can also improve your credit by establishing a history of on-time repayments.
Available in: Arkansas, California, Colorado, Connecticut, District of Columbia, Florida, Georgia, Idaho, Illinois, Iowa, Louisiana, Maryland, Massachusetts, Michigan, Minnesota, Missouri, New Jersey, New Mexico, New York, Ohio, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Washington, Wisconsin
SunTrust has two lines of credit, but only its Select Credit Line is secured. You can borrow up to $5 million — and variable rates start at a low 5% with its autopay discount. To be eligible, you'll need a SunTrust Bank investment or deposit account with at least $100,000 to act as collateral. It also doesn't charge an annual fee — rare for a LOC provider. However, the high minimum draw of $25,000 and the size of collateral needed make it a poor choice for those who aren’t already invested with SunTrust.
Only available in: Alabama, Arkansas, Florida, Georgia, Maryland, Mississippi, North Carolina, South Carolina, Tennessee, Virginia, Washington, West Virginia
Extremely competitive variable APR
Lines up to $5 million
No annual fees
Investment or deposit account of $100,000 required
LendingTree is a top-tier connection service that works with multiple lenders. You only need to fill out one application to see home equity line of credit (HELOC) options across the country. And if you become eligible for a better rate from one of its providers, you’ll be alerted as soon as possible so you can make an informed decision on your line.
Multiple lenders in network
Quick alerts for better deals
May receive high volume of marketing materials
Good to excellent credit required
Loan products offered
Conventional, Jumbo, FHA, VA, USDA, Home Equity, HELOC, Reverse, Refinance
Affected by COVID-19? Consider a personal line of credit
Many banks and credit unions offer a personal line of credit as overdraft protection. In an emergency when funds are tight from being unable to work, that extra protection can save you from facing overdraft fees.
A personal line of credit can also be a fast way to access cash — one that typically has a lower APR than a cash advance from a credit card. And while they usually carry a higher APR than a personal loan, you only pay interest on the amount you draw. That means if you qualify for a high limit, you won’t pay interest on the full amount unless you draw it in full.
A line of credit allows you to draw funds up to a set credit limit. You can borrow money as you need it, just like a credit card, and you won't have to repay in a lump sum. But interest rates tend to be variable, which can make it difficult to predict your monthly repayments.
Personal loans vs. lines of credit: Major differences
There is one major difference: Personal loans offer borrowers a single lump sum and, generally, a fixed interest rate over a set loan term. Lines of credit only require you to pay interest on what you borrow. But other factors, like how you use your funds and the APR you’re offered, are typically quite similar.
Compare interest rates. Some lines of credit have a fixed rate, but most have a variable rate that changes based on the prime rate published by the Wall Street Journal. If you don’t have the best credit, look for lenders that have a low maximum rate.
Note the fees. With a line of credit, you may have to pay some combination of annual fees, monthly fees, establishment fees and draw fees. Create a running list of fees for each lender you’re considering and factor that into your repayment budget.
Understand the repayment process. Many lines of credit are repaid with minimum monthly payments, though others might turn each draw into a term loan. Make sure you understand how repayments work for each option you’re considering before applying.
Consider how funds are withdrawn. You can typically withdraw funds as you need. But there may be a delay between the withdrawal date and when the funds appear in your account. Some lenders may only allow you to do bank transfers, while others might provide a debit card or checkbook to make withdrawals easier.
Pay attention to collateral. Many banks allow you to secure your line of credit with a savings account or CD, which can get you a lower APR. Others, especially online lenders, offer unsecured options. These will have a higher APR, but you won’t risk losing your asset if you default.
Check online reviews. When you compare lenders, see what other customers had to say about their service and the borrowing process. Try to select a lender with a good balance of honest, truthful reviews.
These lenders have some of the best line of credit options for borrowers of all credit types. But if you’re not sure a line of credit is right for you, you might want to compare the best personal loans instead.
Our answers to common questions about personal lines of credit.
How will a personal line of credit affect my credit score?
It depends on how you use it. While the initial loan application can lower your score by a few points, on-time payments can help improve your score over time. But if you miss payments, expect to see the opposite result.
Can I use a line of credit for business expenses?
Some lenders may allow you to use a personal line of credit for business expenses, but you should check first — restrictions on how funds are used will vary. If you’re not able to, you might want to look into business lines of credit instead.
Will I be approved automatically if I have a high credit score?
Not necessarily. Lenders will use your credit score to guide their decision, but ultimately your approval will depend on a variety of factors, including your debt-to-income ratio and current financial situation.
Can I get a line of credit with bad credit?
Technically, yes — but it will be harder to qualify for the best rates. Be careful to avoid short-term lenders that offer lines of credit. The high interest rates on these lines can trap you in a cycle of debt.
Kellye Guinan is a seasoned financial writer with over 500 articles under her belt spanning all things loans from auto to personal to business and everything in between. With four years in the field and five years of research experience, she's able to make complex personal finance decisions easier for anyone to tackle. When she's not up to her knees learning about the latest trends in lending, she spends her time improving her own financial literacy and expertise — and maintaining a Duolingo streak of over 1,300 days.
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