• Home
  • Get a loan
  • Investing
  • How it works
  • About us
  • Blog
    • Peer to Peer Lending
    • Money Smarts
    • Debt
    • Savings
    • Financial Tips
    • Loans
    • Personal
    • Credit
    • Score
    • P2P Lending Buzz
  • Help
Peerform | Peer to Peer Lending Blog
line of credit
Cards, Credit, Financial Tips, Score

Is a Line of Credit the Way to Go?

By Joseph · On January 21, 2016


Winter financial goals may have you looking at your line of credit.

This is a popular time to finally tackle all of those home remodeling projects that you have been dreaming about.  Or, if a winter wonderland is not your cup of tea, you may be yearning to take a vacation to warmer climates.

The winter months can also bring on post-holiday panic as the bills begin to arrive and you have a visual reminder of how much shopping you did. If you are planning a summer wedding, you may be in need of cash now to pay certain vendors who require advance deposits.

How to Access Cash Quickly

There are several ways you can speedily access much-needed cash to cover shortfalls or new expenses. Many consumers turn to Payday loans or take a cash advance on their credit card. Some simply pay whatever bills or expenses they can with their credit cards. None of these are good choices. A line of credit from the bank is another popular option.

But, is a line of credit the best way to go? Is there a better alternative?

Line of credit: The basics

  • A line of credit is a flexible loan from your bank.
  • It is an unsecured revolving account with a fixed maximum.
  • Unlike a regular loan where you receive your money and begin making payments immediately, with a line of credit you do not begin making payments until you actually withdraw the funds.
  • You only pay interest on the portion that you withdraw. The maximum amount is determined by your standing with the bank.

Why a Line of Credit may Not be the Way to Go

1. You need good credit: The process for securing a line of credit is the same as with a regular bank loan. Because the line of credit is unsecured, banks are extremely cautious. You must have a Credit score and a demonstrated ability to repay the credit line.
2. Interest rate: The interest rate on your line of credit is variable and will be higher than a conventional loan. Because your access and repayment are also varied, you may be surprised at the amount of interest you end up paying.
3. Temptation: Once your line of credit is open, you may find yourself tempted to tap into it without first giving serious consideration to the consequences. A personal line of credit can become a means by which to cover things you cannot afford. In the end, you may find yourself not only maxed out on your line of credit but also unable to pay your recurring bills.

line of credit

What is the Alternative?

When you find yourself in need of quick access to cash, a much better alternative is an unsecured loan from a peer-to-peer lender. With a peer-to-peer loan, you can:

  • consolidate your debt
  • pay for wedding expenses
  • enjoy that much-needed vacation
  • or begin designing your dream kitchen.

The peer-to-peer loan application process is online, easy to navigate, and your funds are ready for you when you need them.

Unlike the bank, your credit score does not have to be perfect. P2P lending platforms are people lending to people. They have become the fastest growing lenders in the world. Interest rates are reasonable and fixed, fees are low and there are no surprises.

Your repayments are deducted automatically from your bank account. Instead of turning to a line of credit from your bank, open your computer and apply for a peer-to-peer loan.

What do you think?

comments

car loans for bad creditconsolidate loancreditScore

Joseph

You Might Also Like

  • saving money on your car purchase Financial Tips

    Secrets to Saving Money on Your Car Purchase

  • rebuild your credit Credit

    How to Rebuild Your Credit After Bankruptcy?

  • stay committed to your retirement savings Financial Tips

    How to Stay Committed to Your Retirement Savings

Sign Up for the Latest News

Join the Peerform community and stay abreast of career tips, workplace trends, fintech, money advice and more

@peerform on Twitter

  • Tweet Avatar
    Getting out of #debt is still your top financial priority. https://t.co/6nw1dCsRSK https://t.co/uGajHg7XlH

    10 months ago
    1 retweet 1 Favorite
  • Tweet Avatar
    7 Secrets to #saving #money on your car purchase. https://t.co/EDv2yO2V0e https://t.co/iOgoxtglUu

    10 months ago
    1 Favorite
  • Tweet Avatar
    3 ways to build #credit without taking out a #creditcard. https://t.co/EMj1Pwt0AM https://t.co/koVnMLvL4l

    10 months ago

Find us on Facebook

RSS Peerform Online Lending

  • Secrets to Saving Money on Your Car Purchase March 19, 2020
    Saving money should be one of your constant priorities. This is why you’re budgeting, tracking your money and checking your credit report. A car purchase can be a drain on your budget, especially if you weren’t able to save for it. So, you need some strategies for saving money on your car purchase. 7 Secrets […]
  • Hetty Green: “Witch of Wall Street” March 12, 2020
    Hetty Green was the richest woman in America during her era. Possessing a keen eye for potential market fluctuations and an innate sense of timing, she was able to turn a modest inheritance into a fortune. Green was ahead of her time. Her profound intelligence in money matters and commitment to financial independence was not […]
  • How to Rebuild Your Credit After Bankruptcy? March 5, 2020
    You had to file for bankruptcy. Your credit score has tanked. What do you do now to rebuild your credit? Roughly 752,000 cases of personal bankruptcy were filed in 2019 (Statistica.com). This is a vast improvement over 2010, when almost 1.6 million bankruptcies were filed. If you had to file bankruptcy, you are not alone. […]
  • How to Stay Committed to Your Retirement Savings February 27, 2020
    It’s easy to set up a 401(k) or IRA. Yet, more than half of Americans say they are not where they should be in their retirement savings. (Bankrate 2019 financial security survey) And 38% of the people surveyed said they don’t have a retirement savings account at all. How can you stay committed to your […]
  • Top 10 Money Tips from the Financial Experts February 20, 2020
    It’s always great to have money tips from the experts to help us meet our financial objectives. According to all the surveys, improving our financial lives was the second most popular New Year’s resolution for Americans in 2020. Taking first place was getting in shape. And, as we’ve reported before, most resolutions are already forgotten […]

© 2014 Peerform. All rights reserved.

Privacy Policy