5 Best Personal Lines of Credit: Rates and Top Picks

A personal line of credit is a loan you can access when you need it. Rates vary among lenders. You can find an unsecured line of credit, for which you don’t need collateral, or a secured line of credit for which you do need collateral in a variety of ways.

To help you figure out your best option for borrowing money, here’s a comparison at five of the best personal lines of credit.

Key Takeaways

• A personal line of credit is reusable, not a one-time payout. You can borrow up to a set limit, pay it back and draw again — often at a lower annual percentage rate than a credit card.

• Rates and limits vary a lot by lender. Among the options here, unsecured lines run from about 4.45% to 20.75% APR, with credit limits from $500 to $50,000.

• Unsecured is the most common type, but collateral can help. A secured line of credit backed by savings or a money market account can reach up to $100,000 and may help you qualify for a lower rate.

• Watch for annual fees and how you access funds. Some lines charge a $25 to $50 annual fee, and several don't offer card access — you draw funds by check, online transfer or at a branch.

• Start with your current bank or credit union. An existing relationship can simplify approval and may earn a rate discount — TD Bank, for example, offers a 0.25% discount with a personal checking account.

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Best Personal Lines of Credit at a Glance

Best Unsecured and Secured Personal Lines of Credit

Unsecured personal lines of credit are the most common type and don't require any collateral.

Secured lines of credit require you to have collateral, such as a savings account, to qualify. You may want to consider a secure personal line of credit if you want a better interest rate than what you can qualify for with an unsecured line.

Here are some of the best ones out there.

U.S. Bank Personal Line of Credit

You need to be a U.S. Bank customer to get the U.S. Bank line of credit, but there's no minimum asset requirement. U.S. Bank makes it easy to access your funds: You can use Personal Line Access checks, a Visa Access card, an ATM, online transfers or if you prefer a human touch, visit a branch.

Pros:

• You have easy access to your funds.

• The loan has no collateral requirements.

• You don't have to pay an annual fee.

Cons:

• Use the Visa at an ATM, and you'll pay a 4% fee.

• You'll pay a 3% fee on each foreign purchase or cash advance transaction you conduct in foreign currency.

TD Bank Personal Unsecured Line of Credit

TD Bank's line of credit offers reasonable rates and a range of credit line amounts. You won't need any assets to get this unsecured line of credit, but you'll pay a $25 annual fee.

Pros:

• Rates on this loan are relatively reasonable.

• You'll get a 0.25% rate discount if you have a TD Bank personal checking account.

Cons:

• Loans are limited to certain states.

• You might need more than the $50,000 credit limit.

Regions Bank Preferred Line of Credit

The Regions Bank Preferred line of credit offers borrowers amounts between $500 and $50,000. You'll pay a $50 annual fee, and your monthly payment will be the greater of 3% of your current balance or $50.

Pros:

• It's easy to figure out your monthly payment.

• Rate discounts may be available, depending on your relationship with Regions, or if you choose to have your line of credit payments automatically debited.

• You can access funds online, via checks, by telephone or by visiting a branch.

Cons:

• Lines of credit are limited to certain states.

• No card access to the line of credit

KeyBank Preferred Credit Line

The KeyBank Preferred credit line offers limits ranging from $500 to $25,000. However, there's a reason it's described as preferred: You'll need to have excellent credit to receive the best rates.

Pros:

• You don't have to pay an annual fee.

• Minimum monthly payments are low.

• Interest rates are relatively reasonable.

Cons:

• Personal lines of credit are not available in all states.

Regions Bank Savings Secured Line of Credit

This Regions Bank product is the only secured line of credit on this list and uses borrowers' savings or money market accounts as collateral. Credit lines are available from $250 to $100,000 and can be used as overdraft protection. Monthly payments are the greater of 5% of your outstanding balance or $10. This account has a $50 annual fee.

Pros:

• Your line of credit serves as overdraft protection in addition to covering other expenses.

• Higher line of secured credit up to $100,000

• You might qualify for a discount if you have a relationship with the bank or set up automatic payments.

Cons:

• You must have a savings or money market account to use as collateral.

• Access to funds by card is not available.

Personal Line of Credit vs. Personal Loan

A personal line of credit is distinctly different from a personal loan. The key difference between the two is that a personal loan gives you a lump sum payment, whereas a personal line of credit provides you with funds you can draw on up to your credit limit.

Once you repay the funds, you can draw from them again, similar to a credit card. Businesses often use lines of credit to manage cash flow. If the lump sum option sounds better to you, here's how personal loans work.

If you don't need to borrow much, small personal loans typically have fixed rates and can be used to pay off debt, consolidate debt, make a big purchase or even for an emergency.

How To Apply for a Personal Line of Credit and Is it Right for You?

What Lenders Look At

The easiest way to apply for a personal line of credit is to apply with your current financial institution, where you have a banking history.

Here are some examples of what banks and credit unions consider when you apply for a personal line of credit:

• Credit history and score

• Proof of income

• Additional sources of income

• Employment information

• Monthly expenses, such as your mortgage or rent payment

If you're applying for a personal line of credit somewhere other than your current bank or credit union, you may have to become a customer of that bank or credit union by opening a deposit account before it will consider granting you a personal line of credit.

Is a Personal Line of Credit a Good Idea?

If you need access to a flexible line of credit for larger planned expenses, and you will have the funds to pay it back within a reasonable amount of time, it could be a good idea. Otherwise, you risk needlessly racking up debt plus interest.

The interest rate on a personal line of credit is often lower than the average credit card APR, but may not be as good as what you can get with a personal loan. And if your credit score isn't as good as it could be, you won't be eligible for the best rates, which means you'll pay more toward interest.

As an alternative, you might be able to qualify for a better rate by applying for a secured line of credit, which requires collateral, or by applying through a credit union.

👉 Best Personal Loans

FAQ

What credit score do you need for a personal line of credit?

Lenders usually like to see good credit — around a score of 670 or higher — which makes you more eligible for the best rates. You might still be qualify if you have credit, though the rate could be higher and approval isn't guaranteed. If you opt for a secured line of credit that's backed by savings, that can help improve your odds if you have a lower score.

Does opening a personal line of credit affect your credit score?

Opening a personal line of credit can affect your credit score, since the lender usually checks your score with a hard credit inquiry. This makes your score dip at least temporarily. A personal line of credit is revolving credit, so it's best to keep your balance low and maintain a steady payment schedule to help your credit improve over time. On the other hand, always carrying a high balance or missing payments hurts your credit score.

How is interest charged on a personal line of credit?

Interest is charged on a personal line of credit only on the amount you draw, not the full limit. It's different from a credit card, since a line of credit will typically start charging interest the minute you take out the funds, so there isn't a grace period.

Can you get a personal line of credit with bad credit?

Yes, you can get a personal line of credit with bad credit, though it may be more challenging and you may only qualify for higher rates. You could try a secured line of credit, which relies on collateral from savings, for example, and may help with qualifying you for a better rate. Consider a credit union where you're already a customer to help improve your chances.

How much can you borrow with a personal line of credit?

How much you can borrow with a personal line of credit depends on the lender, as well as what you may qualify for based on credit, income and other factors in your financial profile. The options below range from $500 to $50,000, and up to $100,000 for a secured line of credit.

Key Terms

• Personal line of credit: A revolving credit account that lets you borrow funds up to a set limit, repay them and borrow again as needed.

• Unsecured line of credit: A line of credit that doesn't require collateral. Approval is based on your creditworthiness, which often means higher interest rates.

• Secured line of credit: A line of credit backed by collateral — like a savings account — which may help you qualify for a lower interest rate.

• Annual percentage rate (APR): The yearly cost of borrowing money, expressed as a percentage. It includes interest and certain fees.

• Collateral: An asset — such as a savings or money market account — you pledge to a lender to back a loan or line of credit.

Sources

• Consumer Financial Protection Bureau. Personal lines of credit.

• Federal Reserve Board. Consumer credit glossary.

• Consumer Financial Protection Bureau. What is collateral.

• U.S. Securities and Exchange Commission. APR definition.

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