What is a Personal line of credit?

[Anonymous]

What is a Personal line of credit? Do you get a visa/master card? Go to the bank to get cash from the bank instead of plastic...?

[Anonymous]

and to add on to OP's question: Should we get one for the sake of diversifying to increase our FICO scores even if we don't need the personal line of credit?

[Skye12329]

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@Anonymous wrote:

What is a Personal line of credit? Do you get a visa/master card? Go to the bank to get cash from the bank instead of plastic...?

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Its like a cash reserve in a way but a loan. You don't get a visa or MC. You basically borrow the money from a seperate account which is generally linked to your checking account or so. The money does need to be paid back but will usually have a lower rate for interest. 

[jbsea]

Like Skye said, it's a loan, but a revolving loan.  In that it acts like a credit card but you have no card.  You can use it as overdraft protection.  The bank will also over you checks that you can write against the line of credit.

[youdontkillmoney]

It's treated like a revolving loan, just like credit cards, on your credit report.

Unlike most, US Bank's Prelmire Line of Credit DOES issue a card that you can use to pay for things and use like a "credit card"--I have one.

Most places just issue you checks or you transfer money from the line to your checking account, mostly withiin the same bank.

[Anonymous]

Basically a bank account that goes negative instead of positive, and charges interest when it is. Often linked to a regular account as overdraft. Often comes with checks. Charges interest immediately on being drawn and can be paid down at any time.

[Anonymous]

This seems like a good place for some discussion:

In Canada, PLOC's are popular, and cheap. In the US they aren't as common, and they are expensive. I don't really get why the difference as otherwise interest rates in the US are generally lower.

In Canada I have an unsecured $50k PLOC that runs at 5.5% interest if I use it but charges no fees otherwise. My Canadian credit is good, but not perfect, and there are people with a lower rate than mine. I also have a secured HELOC for $25k that runs at 2.7% interest, again only if I use it.

In the US most institutions seem to think 9% is a low rate for a PLOC with 11% and above being more common.

PLOCs are excellent products for helping you manage variable spending. Set one up as an overdraft on the amount your credit cards autopay in full from, and if you overspend one month the balance runs on the PLOC at its rate. In Canada, that means it runs at a good interest rate and it happens automatically via autopay and overdraft.

You can do the same in the US but at an inferior rate, it seems people prefer to do credit card balance transfers manually to get good rates.

Not sure why they haven't caught on here the way they have in Canada.

[lhcole77]

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@Anonymous wrote:
This seems like a good place for some discussion:

In Canada, PLOC's are popular, and cheap. In the US they aren't as common, and they are expensive. I don't really get why the difference as otherwise interest rates in the US are generally lower.

In Canada I have an unsecured $50k PLOC that runs at 5.5% interest if I use it but charges no fees otherwise. My Canadian credit is good, but not perfect, and there are people with a lower rate than mine. I also have a secured HELOC for $25k that runs at 2.7% interest, again only if I use it.

In the US most institutions seem to think 9% is a low rate for a PLOC with 11% and above being more common.

PLOCs are excellent products for helping you manage variable spending. Set one up as an overdraft on the amount your credit cards autopay in full from, and if you overspend one month the balance runs on the PLOC at its rate. In Canada, that means it runs at a good interest rate and it happens automatically via autopay and overdraft.

You can do the same in the US but at an inferior rate, it seems people prefer to do credit card balance transfers manually to get good rates.

Not sure why they haven't caught on here the way they have in Canada.

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This sounds wonderful!

I have an 8.25% PLOC with NASA. I would love the 5.5% rate though. Score 1 for Canada.