Pros and Cons of Personal Lines of Credit

Pros and Cons of Personal Lines of Credit

The funds are usually accessed through line-of-credit checks or bank transfers. The borrower then receives a credit limit for the duration of the loan. Below is a discussion of the pros and cons of personal lines of credit.


The major advantage is that it offers flexibility. You can pay off the credit when required. This is a vast difference compared to traditional loans, and one that makes it convenient for users.

Besides, there are much fewer restrictions on the purpose of your personal line of credit, unlike traditional loans. You can even draw 100% cash without any restrictions.


Like other forms of revolving credit including credit cards, personal lines of credit may affect your credit score negatively. This will happen if you have a high balance of more than 30% of the set credit limit in most cases.

The personal lines of credit have non-deductible interest rates. In case the interest rate increases, the variable rate of the line of credit also rises alongside. The maintenance fees remain the same despite usage.

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