A personal line of credit combines elements of both a credit card and a personal loan. Like a personal loan, you can secure a personal line of credit from a lender such as a bank or credit union. Like a credit card, a personal line of credit is a type of revolving credit that allows you to borrow up to your credit limit as needed.
A personal line of credit is a great option if you’re considering a personal loan but don’t know exactly how much money you’ll need. It’s a flexible option that could potentially result in you paying less interest over time, since you’ll only borrow as much as you need instead of a large lump sum.
Like a personal loan or credit card, you can use a personal line of credit to fund a wide variety of expenses.
What’s Ahead:
Overview of the best personal lines of credit in 2021
Lender Best for APR Limit Line term
SunTrust Large credit limit Variable based on the Wall Street Journal Prime Rate $250,000 Up to four years
PNC Bank No prepayment penalty Variable based on the Wall Street Journal Prime Rate $25,000 Continuous
PenFed Credit Union Fixed rate 14.65% APR $20,000 Continuous
Regions Bank Automatic payment discounts Variable based on the Wall Street Journal Prime Rate $50,000 Continuous
Key Bank Competitive rates 9.49% to 14.74% when you open your account, then variable based on the Wall Street Journal Prime Rate $25,000 Continuous
US Bank Online application Variable based on the Wall Street Journal Prime Rate $20,000 Continuous
SunTrust
APR: Variable based on the Wall Street Journal Prime Rate.- Limit: $250,000.
- Line term: Up to four years.
SunTrust is unique among the lenders featured in this list because of its unusually large credit limit of $250,000. This makes the lender a great choice for borrowers with significant expenses who are looking for a flexible way to fund purchases. This personal line of credit comes with variable rates, and can be extended for up to four years.
Because of the high credit limit, a personal line of credit from SunTrust does come with some additional qualifications you’ll need to satisfy in order to be approved. The lender requires that applicants have verifiable assets of over $100,000 in order to demonstrate liquidity. This means that this personal line of credit is out of reach for borrowers who don’t have valuable assets saved up.
SunTrust’s personal line of credit has no application fee or annual fee, and borrowers can secure a 0.25% discount when they set up automatic payments from a SunTrust bank account.
PNC Bank
APR: Variable based on the Wall Street Journal Prime Rate.- Limit: $25,000.
- Line term: Continuous.
A personal line of credit from PNC Bank is a great option for borrowers looking for a flexible, convenient way to fund a variety of projects. Loan amounts range from $1,000 to $25,000, perfect for projects big and small.
One of the stand-out benefits of a personal line of credit from PNC Bank is that there’s no prepayment penalty. This means that you can pay off your balance whenever you want in order to save interest, without incurring any potential extra fees.
A drawback to this personal line of credit is that borrowers can only apply over the phone or in-person at a PNC Bank. Unfortunately, there’s no way to complete an application online, but for borrowers who don’t mind putting in a little extra effort when applying, this line of credit is a solid option.
PenFed Credit Union
APR: 14.65% APR.- Limit: $20,000.
- Line term: Continuous.
Unlike many lenders on this list, who offer variable rates based on the Wall Street Journal Prime Rate, PenFed Credit Union is unique in that it offers a fixed rate of 14.65% APR. While this is potentially a little higher than the lower variable rates borrowers may qualify for, it can provide peace of mind for borrowers who want to know exactly what their rate will be over time.
The application process for a personal line of credit from PenFed is quick and easy, and borrowers can receive a decision in as soon as one business day. If you’re approved, you also get free checks to access your line.
Borrowers do need to become a member of PenFed in order to qualify for a personal line of credit, but it’s easy to apply to become a member online. While PenFed does cater to service members, no military service is required in order to apply. Because PenFed is a not-for-profit credit union, members can often secure lower rates and fees on financial products like loans and credit cards.
Learn more about PenFed Credit Union.
Regions Bank
APR: Variable based on the Wall Street Journal Prime Rate.- Limit: $50,000.
- Line term: Continuous.
Regions Bank offers flexible, convenient personal lines of credit to borrowers. After SunTrust, Regions has the second-highest credit limit on this list at $50,000. Whether you’re looking to fund a home improvement project or another significant expense, a personal line of credit from Regions has got you covered.
One handy feature of this personal line of credit is that it comes with rate discounts ranging from 0.25% to 0.50% if you set up automatic payments. However, this personal line of credit does come with an annual fee of $50, an over-limit fee of $29, and a late fee of $35.
Borrowers can apply online for a personal line of credit, but you do need to already be an existing Regions customer to use this option. You can also apply in person or over the phone.
Learn more about Regions Bank.
Key Bank
APR: 9.49% to 14.74% when you open your account, then variable based on the Wall Street Journal Prime Rate.- Limit: $25,000.
- Line term: Continuous.
Key Bank is a great option for a personal line of credit, with competitive rates and credit limits ranging from $2,000 to $25,000. The personal line of credit comes with an interest rate of 9.49% to 14.74% APR when you open an account based on your creditworthiness. After that, the rate is variable based on the Wall Street Journal Prime Rate.
If you’re only interested in a small line of credit of only a few thousand dollars, Key Bank also offers their KeyBasic line of credit, which has a limit of $5,000.
One of the main drawbacks of a personal line of credit from Key Bank is that it’s only available in fifteen states. Key Bank is currently available to customers in Alaska, Colorado, Connecticut, Idaho, Indiana, Massachusetts, Maine, Michigan, New York, Ohio, Oregon, Pennsylvania, Utah, Vermont, and Washington.
US Bank
APR: Variable based on the Wall Street Journal Prime Rate.- Limit: $20,000.
- Line term: Continuous.
US Bank features an easy, convenient online application for a personal line of credit. Credit limits of up to $20,000 are available. You do need to be a US Bank customer in order to qualify, but it’s easy to set up an account with them.
A personal line of credit also features the same low APR for balance transfers, advances, and purchases. Whether you’re using the line of credit for a home improvement project, to consolidate high-interest debt, or to finance a significant expense, you can only borrow as much as you need to and save on interest when compared with a traditional personal loan.
There are no annual fees for a personal line of credit from US Bank, and you can access funds using a Visa Access Card, checks, online, over the phone, or in-person at a bank branch.
How I came up with this list
When looking for lenders that offered personal lines of credit, I looked for lenders that featured flexible credit limits, competitive rates, and served customers all over the country.
Flexible credit limits
Personal lines of credit are a great fit for projects where you aren’t sure of the budget beforehand, from home renovation projects to freelance cash flow shortages and everything in between.
I looked for lenders with flexible credit limits ranging from a few thousand dollars to tens of thousands of dollars.
Competitive rates
I looked for lenders that offered competitive rates on personal lines of credit. Most lenders base their variable rates on the Wall Street Journal Prime Rate, although some offer a flat rate instead.
Like personal loans and credit cards, personal lines of credit accumulate interest that you’ll have to pay back in addition to what you borrow. This means that securing a low rate can help to save you money over time.
Geographic range
There are many smaller, local banks and credit unions that offer personal lines of credit. These can be a great option for borrowers looking for the personalized service of a smaller financial institution. However, when coming up with this list, I tried to include banks and credit unions that are available in a wide range of locations, with an emphasis on larger regional and national banks.
What is a personal line of credit?
A personal line of credit combines elements of both a personal loan and a credit card. Borrowers apply for a revolving line of credit from a bank or lender, which they can then continually borrow against and pay back over time.
Personal lines of credit often come with lower interest rates than credit cards and are more flexible than a personal loan.
Why should (or shouldn’t) you use a personal line of credit
Wondering if a personal line of credit is right for you? While a personal line of credit is a flexible, convenient form of borrowing, it doesn’t make sense in all situations.
Who should consider a personal line of credit
You should consider a personal line of credit if you have a significant expense on the horizon, but aren’t sure exactly how much it will cost. For example, if you’re looking to renovate your house or complete a home improvement project, you might want to apply for a personal line of credit in order to cover these expenses.
Personal lines of credit tend to come with lower rates than credit cards, but they also may be more for borrowers with poor credit to qualify for.
Who shouldn’t consider a personal line of credit
If you know exactly how much you’ll need to spend on a project, you might want to consider a personal loan instead of a personal line of credit. Personal loans allow borrowers to access a lump sum, then pay it off over time in fixed monthly payments.
Because personal lines of credit can come with the temptation to overspend, they may also not be the best fit for borrowers looking to stick to a strict budget.
Most important features of personal lines of credit
When it comes to deciding on a lender for a personal line of credit, there are a few things you should take into consideration.
Credit limit range
You should look for a lender that has a flexible credit limit range depending on your needs. Some lenders only offer personal lines of credit of a few thousand dollars, which may not be enough for your particular project or expense. Other lenders offer personal lines of credit up to hundreds of thousands of dollars, although these often have to be secured by collateral or dependent on proof of income. Many personal lines of credit have an upper limit in the $20k range.
Low rates and fees
Most lenders base their rates on the Wall Street Journal Prime Rate, but you should be sure to compare rates and fees in order to ensure you’re getting the best deal. Choosing a lender with low rates and fees can help you to save money and pay down debt faster.
Continuous term limit
Depending on your needs, you may want to look for a lender that offers continuous term limits, with no fixed end date to the credit line. This means that you can continue to borrow against your personal line of credit when you need to, without having to reapply.
Flexible application and payment options
Not all lenders allow borrowers to apply and manage their account completely online, so be sure to look for lenders that support this option if it’s important to you. On the other hand, if you prefer to do your banking in person, you might want to consider banks and lenders with brick-and-mortar locations in your area.
Summary
While somewhat lesser-known, personal lines of credit are a great option for borrowers that combine some of the best elements of both credit cards and personal loans. While personal lines of credit aren’t the best fit for every situation, they’re a good choice if you have a significant expense with an uncertain budget.
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