Glossary
A revolving facility you can draw on, repay and draw again up to a limit.
✓ Checking what you qualify for does not affect your credit score.
A revolving facility you can draw on, repay and draw again up to a limit.
Interest is charged only on the amount drawn. As you repay, availability returns.
It is flexible and cheap when available.
A $50,000 line with $20,000 drawn costs interest on $20,000.
Banks often review lines annually.
A line of credit is reviewed at set-up and again at renewal. Banks look at utilization: a line that sits at its limit signals strain, whereas one used occasionally and repaid reads as healthy. Treating the limit as a reserve rather than a target keeps it available.
A line is not free money. Interest runs on drawn balances, and a bank can reduce or cancel it on review.
Is the limit reviewed annually, and what triggers a reduction? Is interest charged only on the drawn balance? Are there standby or annual fees? Does the bank require a general security agreement? Answers to these four questions explain most of the real cost and risk of a line, and they are worth writing next to the offer before you sign.
Usually, if you qualify.
See the related guides and the comparison pages, or apply and ask.
No. It is educational information, and agreements vary.
Educational information only. It is not legal, tax or accounting advice.
Same-day decision. Applying takes a few minutes and will not affect your credit score.
