Line of Credit – 5 Best Personal Line of Credit Loans in 2021

If you have a major expense looming but don’t know exactly when or how much money will be needed, then a Line of Credit could be a great alternative to using a credit card, overdraft or fixed personal loan.

The reality of life in recent times means a lot of us have used our “rainy day money” to see us through some seriously rainy days. But this can leave us short of funds for major items, either planned or unforeseen and a Line of Credit could be just the right solution.

The difference between a Line of Credit and a personal loan is that you get an agreed maximum amount at the start of the Line of Credit but only draw the funds as and when you need them. And the benefit of that is that you only pay interest on the amount you’ve drawn.

And a Line of Credit loan will usually be less expensive than borrowing on credit cards or overdraft.

The number of Line of Credit lenders is less than for more basic loans such as personal loans and payday loans, and almost all will carry out a credit check. But don’t be discouraged if your credit score isn’t great as there are Line of Credit loans available for bad credit, debt consolidation, and the unemployed.

#1 Line of Credit Loans in 2021 – Credit Clock

 

Best Personal Line of Credit Loans – Quick-Pick

  1. Upgrade – Best for Quick Line of Credit Loans. Visit Now.
  2. Penfed Credit Union – Best Credit Union and accepts Bad Credit. Visit Now.
  3. US Bank – Best Bank and Competitive Costs. Visit Now.
  4. Tally – Best for Debt Consolidation. Visit Now.
  5. Elastic – Best for Bad Credit Line of Credit Loan. Visit Now.

What Are Personal Lines of Credit?

A Personal Line of Credit is somewhere between a normal personal loan and a credit card. Like a personal loan, a Line of Credit is agreed in advance with a maximum credit amount and usually a repayment term. But, more like a credit card, you only draw down the borrowing when you need it.

The advantage of this is that you only pay interest on the balance you’ve drawn. This flexibility can be useful in a number of situations and can be used to offer peace of mind if you think you’ll need the funds but aren’t sure when or exactly how much.

In some ways a Line of Credit is very similar to a credit card in that there is an agreed maximum that you can draw and as you pay back the balance those funds become available again. But often a Line of Credit will have a lower APR than a credit card, particularly if you draw cash. Many credit cards charge a higher APR on cash balances drawn from an ATM or bank.

A Line of Credit will have a fixed time that it is available for, although this might be up to 5 years or more. The time the funds are available for is known as the “draw period” and after that you enter the “repayment period”, when any outstanding balance starts to be repaid. Interest accrues from the day you draw money until it is totally repaid.

APRs are usually not guaranteed but will be variable and usually based on a rate linked to the Wall Street Journal Prime Rate. That said, several lenders offer fixed rates that are agreed at the application stage.

Unlike payday loans, the lender will always carry out a hard credit check with one or more of the main credit agencies, so it will show on your credit history. And most will require at least a reasonable credit-score.

But don’t be disheartened if your credit history isn’t sparkling as we’ve picked out lenders who will consider bad credit and some that will accept co-signers or co-borrowers to increase your chance of eligibility and possibly reduce the APR you pay.

The way you draw the money you need varies between lenders with some offering a credit or debit card and others allowing direct bank transfer or a check facility.

A number of lenders offer Line of Credit secured on your home, (Home Equity Line of Credit or “HELOC”). There are also lenders (mainly banks) who offer Line of Credit loan secured on a certificate of deposit (CD) or capital held in a deposit account. The lenders we will focus on here are those that offer unsecured Line of Credit.

Common Uses of Line of Credit Loans

Most Line of Credit providers will allow you to use the borrowed money for any purpose. However, they are usually set up with a particular expense in mind.

Common uses include:

Home Improvements

Line of Credit is ideal for paying for improvement projects where the final cost is not certain, and funds need to be drawn over a period of time. Rather than borrow a large lump sum up-front you could save a significant amount of interest by only drawing what is needed as you go.

It might even be possible to re-mortgage the property at the end of the project to pay off the Line of Credit borrowing once the value of the property has been increased by the improvements.

College Fees

Paying an offspring’s college fees can be a financial headache for any parent (or grandparent). But a Line of Credit can be a great way to spread the cost over a more manageable timescale.

Rather than borrow money up-front and start accruing interest, Line of Credit allows the funds to be available when they’re needed, and the availability is pretty much guaranteed.

Medical Expenses

Uninsured medical costs can catch anyone by surprise. And if treatment is likely to be needed over a period of time, a Line of Credit could be the best way to manage the expense.

Seasonal Costs

For freelancers or entrepreneurs in sectors with seasonal highs and lows in earnings, a personal Line of Credit can be a lower cost option than an overdraft or credit card. It allows living expenses to be met without starving the business of cash.

It may however be more tax efficient to take out a business Line of Credit in that situation.

Overdraft Protection

A Line of Credit can be used to avoid getting into a potentially expensive overdraft when extra cash is needed.

Debt Consolidation

Line of Credit could be a good way to pay down more expensive borrowing, such as credit card debt, over a managed time period. Repayment of the outstanding debt over time can help to improve your credit score, and a Line of credit will usually have a lower APR than an outstanding credit card balance.

How to Qualify for a Line of Credit Loan

The eligibility criteria for Line of Credit differs between providers but the following apply to nearly all of them:

  • Must be 18 or state age of majority whichever is higher.
  • Must have a checking account
  • Must have proof of income
  • Must have a reasonably good credit score
  • Must have the ability to repay
  • Must be a US citizen or Green card holder

There are strict rules about what kind of loans can be offered to military personnel. Some lenders don’t meet those criteria and have to exclude members of the military.

Also, not all providers can offer a Line of Credit in all states due to differing legislation.

Our reviews cover these exclusions.

Best Personal Line of Credit Loans Providers – Fully Reviewed

If you think a Line of Credit could be the solution you need, check out the details on our 5 best providers:

1. Upgrade – Best Online Provider for Line of Credit Loans

Upgrade inc. actually offer their Line of Credit via a card, the Upgrade Card. It’s very similar to a credit card except that it has fixed repayment amounts on each draw and the APR is also fixed and generally a lot lower than most credit cards.

You can’t draw cash from an ATM using the Upgrade Card but can carry out an electronic transfer to your bank account.

Each draw is treated as a new loan and may attract a new APR based on your credit score and repayment history. But the fixed nature of the APR can be attractive as there won’t be any surprises.

Upgrade Line of Credit is generally only available if your credit score is above 600.

Military personnel ARE eligible. Upgrade Line of Credit is not available in West Virginia, Wisconsin or Iowa.

Line of Credit Range APR Fees Star Rating (out of 5)
$500 – $50,000 8.99% – 17.99% None 4.5

Pros

  • Fast online acceptance process
  • Upgrade Card can be used anywhere that accepts Visa
  • Can access funds electronically
  • Fixed APR
  • No fees

Cons

  • Card cannot be used at ATMs
  • Each draw can attract a different APR

The Upgrade Card is an ideal Line of Credit if you have a reasonable credit score as the lower end of their APR range is very competitive and fixed. But if your score is lower, the higher end APR is not as attractive.

The application process is fast and efficient, and the flexibility of the Upgrade Card is a real bonus.

2. Penfed Credit Union – Best Credit Union, and Will Consider Bad Debt

Pentagon Federal Credit Union is our top choice for a Line of Credit from a credit union.

As a non-profit organisation a credit union can charge lower APRs than other providers and their maximum APR is capped at 17.99%

Penfed will accept applicants with a credit score as low as 500 and will also allow a co-signer if your score is lower.

The APR is fixed at the acceptance stage and applies as long as the line remains in use. The rate will depend on your creditworthiness and the minimum APR currently is 14.65%.

To qualify for a Line of Credit from Penfed you must be a member of the credit union, but this only involves opening an account with a minimum deposit of $5.

Funds are drawn electronically to your checking account.

Penfed Line of Credit is available in all US states and military personnel DO qualify.

Line of Credit Range APR Fees Star Rating (out of 5)
$100 – $20,000 14.65% – 17.99% Possible late payment fee 4

Pros

  • Fast online acceptance process
  • Fixed APR
  • Easy access to funds
  • No annual or monthly fees.

Cons

  • Must be a Penfed member
  • APR can be on the high side for good credit
  • Maximum credit is on the low side.

Whilst lower APRs are available to those with a good credit score, Penfed is great if your score is at the lower end or you need to use a co-signer. The fact that the APR is fixed can also make budgeting a lot easier.

3. US Bank – Best Bank and Competitive APR

US Bank is one of the few banks that offer a Line of Credit to customers who don’t have a long history as an account holder. You do however need to have held an account with them for 90 days to qualify. It’s very simple to open an account online though.

They only offer Line of Credit to applicants with good credit scores, although they don’t disclose the specific score required.  However, if you qualify, the rate is very competitive.

Their APR is variable and linked to the Wall Street Journal Prime Rate. The rate is currently a competitive 10.25%.

The application process is simple and online and you can access funds electronically, by checks that they provide or via their Visa Access card.

They do charge a 4% withdrawal fee for cash advances over a bank counter or via ATM.

US Bank offers Line of Credit in all US states and military personnel DO qualify.

Line of Credit Range APR Fees Star Rating (out of 5)
Up to $25,000 Variable, currently 10.25% 4% cash withdrawal fee 3

Pros

  • Easy application process
  • Flexible access options
  • Competitive APR.

Cons

  • Must be an accountholder
  • Must have a good credit score
  • Cash withdrawal fee
  • Relatively low maximum credit.

A US Bank Line of Credit comes in with a competitive APR if you qualify and don’t need more than $25,000 as a maximum balance. Availability to military personnel and in all states is also a bonus.

4. Tally – Tally+ Express – Best for Debt Consolidation

Tally is an online, app-based, provider of debt consolidation loans. The Tally+ Express account is specifically designed for people with large credit card balances who could benefit from paying them down over a managed period.

To apply you need to have a reasonably good credit score above 660. This is checked at application stage with a “soft” credit check.

You simply upload your bank and credit card information and decide what your repayment priorities are from 3 strategies based on highest cost, lowest balances (for “quick wins”) or credit score improvement.

At the application stage you will only be accepted if Tally can offer you an APR that is lower than you are paying on your credit cards. They will then suggest you use their debt repayment app, which is optional, but worth it to take the hassle out of deciding which cards to repay first. The repayments are then taken care of by the app automatically.  The app comes at a cost of $4.99 per month.

Because the credit limit is revolving, you can use it to include other card balances once you have paid down what you owe them.

Tally+ Express has a fixed annual cost of $300.

Tally+ Express is not available in Montana, Nevada or West Virginia. Military personnel DO qualify

Line of Credit Range APR Fees Star Rating (out of 5)
$2000 – $30,000 7.9% – 29.99% $300 per year – $4.99 per month for debt management app 4

Pros

  • Only available if it can save you money
  • Takes the hassle out of debt payment strategy
  • Can be used to improve credit score
  • Fast application process.

Cons

  • Only available with good credit score
  • Fixed annual and monthly fees.

Tally+ Express is not for people with bad debt problems but is ideal if you have accumulated high credit card balances and would benefit from a rolling program of early repayment.

5. Elastic Line of Credit – Best for Bad Debt

Elastic is an online lender, and their Line of Credit is aimed at those who might frequently need Instant payday loans to see them through.

Rather than repeatedly applying for short term loans, Elastic allows you to have a revolving Line of Credit that is repayable over a period of up to 10 months.

Rather than charge an APR Tally charge between 5% – 10% of each cash withdrawal. In addition, they charge a monthly fee of between $5 – $350 per month on outstanding balances.

You can find out what the costs would be for you by using their online calculator.

Unusually for a Line of Credit provider, Tally will accept welfare benefits as a form of income.

The application is online and funds will normally be transferred to your bank within 2 days of acceptance.

Tally is available in 39 states, but residents of Colorado, Connecticut, Georgia, Massachusetts, New Hampshire, New Jersey, New York, North Carolina, Pennsylvania, Vermont and West Virginia don’t qualify. It is also NOT available to military personnel.

Line of Credit Range APR Fees Star Rating (out of 5)
$500 – $4,500 Not applicable 5% -10% Cash advance fee

$5 – $350 per month outstanding balance fee

3

Pros

  • Potentially cheaper than payday loans
  • Welfare benefits considered
  • More convenient than payday loans
  • Can be paid down early without penalty

Cons

  • Potentially very expensive
  • Not available in all states
  • Low maximum credit.

Elastic certainly isn’t cheap; those fees could amount to the equivalent of APRs in triple figures if you pay it over the maximum term. However, they don’t charge prepayment penalties so, by paying back the outstanding balance early, you could save money compared to repeatedly taking out payday loans.

It is only really suitable if you frequently need payday loans to see you through but shouldn’t be seen as an option if you’re likely to pay it down over the maximum term.

 

How to Get a Line of Credit Loans

The application process for all the providers we recommend is very similar:

CreditClock

  • Fill in the application along with any required documents and proof of income.

  • They carry out a “soft” credit check that won’t appear on your credit file
  • If accepted they will quote terms
  • If you accept, they will carry out a “hard” credit check that will appear on your credit file
  • Funds will normally be available within 4 business days.

Request Your Line of Credit Loans at our Top Rated Provider – Credit Clock

FAQs

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About Jayme Wium PRO INVESTOR

Jayme is a professional freelance writer specializing in personal finance, business, nutrition, botany and mental health. She has studied extensively in these fields and spends a considerable amount of her time creating content to help simplify complex concepts for the everyday person.