Best Personal Lines of Credit of May 2024
Updated April 25, 2024 at 11:18 am
Personal lines of credit allow you to cover expenses as needed, and you only pay interest on the amount borrowed.
A personal line of credit could be ideal if you need to cover a project with uncertain costs—you can borrow against one as needed. Plus, they generally have lower rates than credit cards.
However, you may have trouble finding a personal line of credit since just a few lenders offer them. To help jumpstart your search, we’ve compiled a list of our best personal lines of credit picks. We also teach you how to choose the best option for you.
Our Methodology Newsweek Vault’s loan experts evaluated multiple data points to help our readers make sense of their borrowing options across student loans and personal loans. To narrow down the best available offers, we weigh the product pros and cons across five core categories, including:
- Application process
- Eligibility requirements
- Interest rates
- Loan amounts (minimum and maximum)
- Repayment flexibility”
Our Picks - Best for Small Loan Amounts: PNC Bank
- Best for U.S. Bank Customers With Good Credit: U.S. Bank
- Best for No Annual Fee: KeyBank
- Best for Large Loan Amounts: Fifth Third Bank
- Best for Secured Lines of Credit: Regions Bank
5 Best Personal Credit Lines of 2024
Best for Small Loan Amounts
PNC Bank
Vault Verified
Why We Chose It
PNC Bank offers a personal line of credit with maximum limits starting at just $1,000. If you have a PNC checking account, the line of credit can serve as overdraft protection.
Pros
- Autopay discount
- Overdraft protection for linked PNC checking account
- Continuous draw period
Cons
- Not available in all states
- Annual fee
- Low maximum credit line amount
Additional Information
Funding Speed
- Not disclosed
APR
- Varies depending on where you live
Loan Availability
- Not available in all states
Best For U.S. Bank Customers With Good Credit
U.S. Bank
Vault Verified
Why We Chose It
A U.S. Bank personal line of credit might be an excellent choice if you’re a current customer with a U.S. Bank checking account and a credit score of at least 680. This lender doesn’t charge an annual fee and has a continuous draw period.
Pros
- Competitive starting APR
- Can use line of credit as overdraft protection
- Continuous draw period
Cons
- Low maximum line amount
- Must have a U.S. Bank checking account
- Good credit required
Additional Information
Funding Speed
- Not disclosed
APR
- 12.50% to 22.50%
Loan Availability
- Not available in all states
Best for No Annual Fee
KeyBank
Vault Verified
Why We Chose It
KeyBank offers personal lines of credit with no annual fees up to $25,000. Plus, you can use the line of credit as overdraft protection if you have a KeyBank checking account.
Pros
- No annual fee
- Continuous draw period
- Unlimited check writing
Cons
- Only available in 15 states
- Late fees
- Returned payment fee
Additional Information
Funding Speed
- Not disclosed
APR
- Varies by state
Loan Availability
- Only available in AK, CO, CT, ID, IN, MA, ME, MI, NY, OH, OR, PA, UT, VT and WA
Best for Large Loan Amounts
Fifth Third Bank
Vault Verified
Why We Chose It
Fifth Third Bank could be the perfect fit if you need to cover a large expense—the maximum credit limit for its unsecured line is $100,000. However, a potential downside is that the bank assesses an annual fee of $65 after the first year.
Pros
- High loan amount
- Low APR range
- Autopay discount
Cons
- Annual fee
- Draw period isn’t continuous
Additional Information
Funding Speed
- Not disclosed
APR
- 10.75% to 12.25% (with autopay)
Loan Availability
- Not available in all states
Best for Secured Lines of Credit
Regions Bank
Vault Verified
Why We Chose It
Unlike many lenders, Regions Bank offers unsecured and secured lines of credit with high maximum credit limits. You can borrow up to $50,000 with an unsecured line and up to $100,000 with a line secured by a Regions savings account. To qualify, though, you need to have a Regions savings, money market, checking or CD account that’s at least six months old.
Pros
- Secured lines of credit are available
- Large borrowing limits
- Rate discounts up to .50%
Cons
- Late fees
- Annual fees
- Not offered in all states
Additional Information
Funding Speed
- Not disclosed
APR
- Prime rate plus 5% to Prime rate plus 18%
Loan Availability
- Not available in all states
What Is a Personal Line of Credit?
A personal line of credit is a revolving financial tool that allows you to borrow up to a set amount as needed to cover various personal expenses, like a wedding or a new laptop. As you borrow money, the total credit limit decreases.
Lenders usually allow you to withdraw funds via a check, card or electronic transfer to your checking account. After you withdraw funds, you’re required to make a minimum monthly payment.
Some lenders offer lines of credit with continuous draw periods—you can withdraw from them indefinitely. Others come with two repayment periods: a draw period and a repayment period. During the draw period, you can access funds; once it ends, you can no longer use the line of credit to make purchases.
Pros and Cons of Personal Lines of Credit
Before you apply for a line of credit, consider the potential drawbacks and advantages.
Pros
- Lower rates than some other financial products: Personal lines of credit often have lower rates than other forms of debt like credit cards.
- Only pay interest on the amount you withdraw: You only pay interest on the money you withdraw from your personal line of credit.
- Borrow as needed: You can borrow from a line of credit as needed to cover various expenses, like medical bills and ongoing home renovation projects.
Cons
- No grace period: Unlike a credit card, personal lines of credit usually don’t come with a grace period. Interest starts growing on your outstanding balance from the day you withdraw funds.
- Variable rates: It can be hard to predict borrowing costs because your APR typically fluctuates based on economic changes.
- Fees: Some lenders might charge fees on personal lines of credit, including annual fees, late fees and transaction fees.
Personal Lines of Credit vs. Personal Loans
A personal loan is a lump sum from a credit union, bank or online lender. While personal lines of credit usually have variable rates, personal loans typically have fixed rates.
Personal loans are the better choice if you prefer predictable monthly payments. Plus, they also might be a bitter fit if you know how much you need to borrow.
Personal Lines of Credit vs. Credit Cards
Like a line of credit, you can borrow from a credit card as needed, but there are some crucial differences. Credit cards generally have higher average rates, though 0% APR credit cards have promotional windows. Also, credit cards come with grace periods—as long as you pay your statement balance in full, you can avoid paying interest fees.
Another difference is that, unlike personal lines of credit, rewards credit cards earn cash back, points or miles you can redeem for travel or other purchases.
Personal Lines of Credit vs. Home Equity Lines of Credit (HELOCs)
A HELOC is also a revolving line of credit you can borrow from as needed. HELOCs, like personal lines of credit, often come with variable rates.
The major difference between the two is that your home’s equity secures a HELOC. You generally need at least at least 15% equity in your home to qualify. If you don’t repay your HELOC, you could lose your home.
Why Would You Need a Personal Line of Credit?
Using a personal line of credit might be the ideal choice if you need to cover a project that has an uncertain cost. That said, you could withdraw funds from a line of credit for just about any legal reason, including:
- Debt consolidation: Paying off existing debt with a line of credit could help you save on interest if you qualify for a lower rate.
- Emergencies: You could borrow against your line of credit to cover emergencies like unexpected medical bills or a sudden job loss.
- Home improvement projects: A line of credit can be used to pay for home improvements that could increase your home’s value.
- Moving expenses: If you need money to pay for a local or out-of-state move, a personal line of credit could help.
- Large purchases: Borrowing from a line of credit could also be a solution if you want to cover a large purchase—for example, a new refrigerator—and don’t have the money to pay for it upfront.
How To Choose the Best Personal Line of Credit
While shopping for a personal line of credit, consider these factors to ensure you choose the option that best suits your unique borrowing needs.
- Eligibility requirements: Review lender requirements to gauge your chances of approval before applying. For example, some banks might require you to have an existing relationship with them to qualify.
- Rates: Like other financial products, APRs vary by lender. Compare APRs to evaluate your potential borrowing cost, including fees and interest.
- Line of credit amount: When comparing your options, choose a financial institution that offers your preferred maximum limit.
- Repayment schedule: While some lenders offer continuous draw periods, others only allow you to borrow against the line of credit for up to five years. Select a lender that provides your desired repayment time frame.
Frequently Asked Questions
Is It Easier To Get a Personal Loan or Line of Credit?
Whether it’s easier to get a personal loan or line of credit depends on individual factors like your credit score, income and the lender you’re applying for. For example, if you have bad credit, you won’t qualify for a personal line of credit with U.S. Bank. However, in that scenario, it’s still possible that a lender might approve you for a personal loan with bad credit.
How Does a Personal Line of Credit Affect Your Credit Score?
When you apply for a personal line of credit, lenders usually perform a hard credit check to review your credit history. As a result, your credit score could temporarily drop a few points. However, making one-time payments on your line of credit could improve your credit over time.
How Long Does a Personal Line of Credit Stay Open?
Some lines of credit remain open for up to five years. However, most of the personal lines of credit we researched have continuous draw periods, meaning you can borrow against them until you or the lender closes the account.
Editorial Note: Opinions expressed here are author’s alone, not those of any bank, credit card issuer, hotel, airline or other entity. This content has not been reviewed, approved or otherwise endorsed by any of the entities included within the post. We may earn a commission from partner links on Newsweek, but commissions do not affect our editors’ opinions or evaluations.
