Benefits of Credit Line Card

Benefits of a Credit Line Card

Credit line cards are given with a line of credit or a credit line. In this case, you have a pre-approved amount of money, and you need to only pay interest on the amount you utilize. Direct cash can also be borrowed from credit line cards.

There are multiple benefits of a credit line card. Here we will discuss their advantages and see how they are better than other similar credit products. 

What are the Advantages of a Credit Line Card?

The benefits of a credit line card are manifold. Let’s look at them one by one -

Unlike regular credit cards, you don’t have to pay a joining fee or an annual fee. This works more like a loan, which is kept in reserve for you to use. 

Your interest rates depend on multiple factors like the amount borrowed, your credit score, income, job type, etc. Even then, credit lines have lower interest rates as compared to credit cards or personal loans.

The credit limit in the case of credit lines is higher than that of general credit cards. However, this also depends on your creditworthiness and other factors. 

You can also borrow 100% of your credit limit in cash, which cannot be done in the case of credit cards.

A credit line can be used for an extended period of time. When you borrow and pay back part of your pre-approved amount, the whole amount is again available to be borrowed. In this way, you can use it for years. 

You can repay funds in parts or as a lump sum. You have a lot of flexibility to repay the funds in the way that is most comfortable for you.

When you repay parts of your line of credit properly, the lender may also extend options to top up the limit. 

There are no restrictions on what the funds can be used for. In this criteria, it is very much like a personal loan which can be used for anything from weddings, home renovation, business, or trips. 

As a line of credit involves repeated borrowing and repaying within a said available limit, it is great to build your credit history. If you keep your repayments on time, you come off as a responsible borrower.

You don’t have to pay any fee to close your line of credit. You can close it whenever your requirement ends.

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Conclusion

Just like any other credit product, you need to meet certain eligibility criteria and submit some documents to apply for a credit line. You can apply for a line of credit both online and offline.

It has advantages over credit cards and personal loans, but in the end, its usefulness depends on your requirements. Most top banks and online lenders offer lines of credit and credit line cards. Read our other articles on credit lines to know more about them.

Frequently Asked Questions

Both credit line cards and credit cards have their uses. Credit cards are good for everyday shopping and expenses, whereas a credit line card is good for bigger emergency expenses.
You need to pay interest from the moment you borrow money on a line of credit, and there might also be late payment fees. These are the major disadvantages of a credit line.
All credit products have the potential to harm your credit score if you don’t make your repayments on time. However, if you are regular with your payments, you can build your credit score with a credit line.
A line of credit is good for big expenses that you didn’t plan for or cannot afford in a lump sum. For example, you can use a line of credit to pay for the remodelling of your house that is scheduled to go on over months.
Not using your credit line over a long period of time may lead to it becoming inactive or its limit being reduced. Both can affect your credit score. However, the steps taken will depend on the lender.

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