A personal line of credit, sometimes abbreviated as PLOC, is a revolving credit line available from a bank or other financial institution over a set period of time.
It's somewhat of a hybrid between a credit card and a personal loan. However, there are a few distinguishing features:
- A PLOC allows you to receive funds in allotments, while a personal loan is a lump sum.
- Unlike a personal loan, Interest on a PLOC only accrues on the amount you have used.
- A personal loan is a form of closed-end financing. Once a portion of PLOC is repaid, you may draw on it again.
- The credit limit on a PLOC is typically higher than on a credit card, while the interest rate is usually lower.
- Credit cards usually have a grace period, while interest on a personal line of credit begins immediately.
- There may be withdrawal fees associated with a PLOC.
You can use a PLOC for anything, but it's ideal for situations where you can't predict the final cost of a project or debt.
Many consumers use a personal line of credit to consolidate debt, expand a business, pay medical bills, refinance existing debt or renovate their home.
U.S. Bank Personal Line of Credit
Annual Percentage Rate (APR)
11.50% to 21.50%
Loan purpose
Unsecured revolving line of credit for ongoing needs, like home repairs
Loan amounts
Up to $25,000
Credit score needed
680
Origination fee
None
Cash advance fee
4% of each advance amount, $10 minimum
Late fee
Up to $40
Terms apply.
Pros
- Competitive interest rates
- No origination fee or annual fee
- No collateral required
Cons
- Late fee of up to $40
- No interest-free grace period
Pros and cons of a personal line of credit
There are several use cases where a personal line of credit makes sense, while in other scenarios it may not.
Pros
- You only pay interest on the money that you use.
- The lender replenishes access to your line of credit based on repayment.
- You can use the funds for nearly any purpose, including debt consolidation.
Cons
- Higher interest rate than a traditional personal loan
- Interest rates tend to be variable for personal lines of credit.
- A credit score of over 700 is typically required.
- A transaction fee is assessed each time you draw money
Banks that offer personal lines of credit
Each has different credit limits, terms and fees, so be sure to compare to find the best one for you.
What is a personal line of credit?
| Bank | Line of credit available |
| U.S. Bank | Up to $25,000 |
| KeyBank | Up to $25,000 |
| PNC Bank | Up to $25,000 |
| Regions Bank | Up to $50,000 |
How to qualify for a personal line of credit
Qualifying for a personal line of credit is simple. Once you find a lender with a personal line of credit product that matches your needs, you will be asked for information regarding your current financial picture. This may include:
- Bank statements
- Investment portfolio
- Employment history
- Proof of income
- Statement of what the credit line will be used for
Your credit score will be checked as well, so be sure to monitor your credit closely to ensure there aren't any errors.
Alternatives to a personal line of credit
For consumers looking for additional capital to accomplish their goals, a personal line of credit is one of many products to choose from. However, if you aren't able to qualify, don't fret. There are other options available to consumers for lending.
Personal loans: The largest difference between a personal loan and a personal line of credit is that a personal loan is a closed-end transaction. The lender will issue the funds, and expect repayment on a set timetable.
Credit cards: A credit card is more designed for short-term purchase financing, whereas a personal line of credit is for larger financial transactions and investments. Most credit cards have much higher interest rates than a personal line of credit and you'll face high fees and interest if you don't pay off your entire bill every month.
HELOC: Short for a home equity line of credit, you can apply to pull equity out of your home for financing. Since this is a collateralized loan, interest rates will typically be lower than a personal line of credit.
