 TITLE: How Does a Personal Line of Credit Affect Your Credit? CONTENT: A personal line of credit is similar to a credit card account. A bank or other financial institution extends a line of credit with the invitation to access this money up to a certain amount whenever you need it. Any money you use becomes revolving debt that you pay back over time just like you would with a credit card, with minimum payments and no early repayment penalty. Limits depend on a variety of factors, including your credit score. Typical lines range from $1,000 to $25,000 or more.\nInterest rates on personal lines of credit are generally lower than they would be on a credit card, currently starting around 10% with good credit. Lines of credit may have limited terms, typically three to five years. When the term ends, you can continue paying your outstanding balance until it's paid off, but you no can no longer use the account to draw additional money. Secured lines of credit that use certificates of deposit or investment accounts as collateral may offer higher limits, depending on the size of the account. Some lines of credit come with annual fees.\nA long time ago, when credit card payments pretty much always involved using an actual card, a personal line of credit was a handy way to pay bills or cover expenses that did not accept a card for payment. You might have used it to cover overdrafts on your checking account, for example, or medical bills. Now that you can pay for almost anything with a credit card, the benefit of a personal line of credit may be more psychological than functional: It's a way of borrowing a set amount of money at a decent interest rate and paying it back as a separate debt over time. END