7 Best Personal Lines of Credit

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.

To help you figure out your best option for borrowing money, here’s a look at seven of the best personal lines of credit and the difference between a personal line of credit and a personal loan.

Best Personal Lines of Credit at a Glance

Best Unsecured Personal Lines of Credit

Unsecured personal lines of credit are the most common type and do not require any collateral. Here are some of the best ones out there.

US 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 $3,000 and $50,000. Rates are variable and range from 8.24% to 21.24%. 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

Regions Bank Credit Line

Regions Bank’s unsecured line of credit offers borrowers low limits — from $500 to $3,000 — and the credit line will cover any checking account overdrafts. You won’t pay a fee to cover an overdraft, but if you take out a cash advance, it will cost you the lesser of $10 or 10% of the amount of the advance.

Pros:

• The line of credit covers checking account overdrafts in addition to other expenses you need to cover.

• No fees for overdraft coverage

• Automatic payments are available.

Cons:

• You’ll pay a $25 annual fee.

• No rate discount is available for Regions relationships or enrolling in automatic payments.

KeyBank Preferred Credit Line

The KeyBank Preferred credit line offers limits ranging from $2,000 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. Your minimum payment will be the greater of 1/120th of your outstanding balance or $50.

Pros:

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

• Minimum monthly payments are low.

• Interest rates are relatively reasonable.

Cons:

• To obtain the best rate, you’ll need a credit score of at least 780.

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

Best Secured Personal Line of Credit

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.

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.

Best Personal Line of Credit for Borrowers With Bad Credit

If you have credit that’s not so good, you may want to apply for a personal line of credit with a credit union. Credit unions tend to evaluate applicants on their whole financial picture, rather than focus mainly on their credit history and scores.

PenFed Credit Union Personal Line of Credit

PenFed’s personal line of credit may be an option if your credit score and history are lacking. However, while rates start as low as 5.99% APR, you won’t likely qualify for the best rate if your credit is poor. Even so, if you need access to a line of credit and have the means to pay it back, this could be a good option.

Pros:

• Fixed APR as low as 5.99%

• Free checks for credit line access

• Approval could occur as early as the next business day.

Cons:

• After opening your account, a period of three business days must pass before you are eligible for credit line advances.

• Credit lines are only available up to $25,000.

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. Businesses often use lines of credit to manage cash flow.

How To Apply for a Personal Line of Credit

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. Note that 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.

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

Is a Personal Line of Credit a Good Idea?

Whether a personal line of credit is a good idea depends on your financial situation.  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 is not 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.

Brian Nelson contributed to the reporting for this article.

Methodology: GOBankingRates identified the best personal lines of credit by analyzing interest rates, available amounts of credit lines and required collateral. Data is accurate as of May 18, 2022. 

GOBankingRates is a personal finance and consumer interest rate website owned by ConsumerTrack Inc., an online marketing company serving top-tier banks, credit unions and other financial services organizations. Some companies mentioned in this article might be clients of ConsumerTrack Inc., which serves more than 100 national, local and online financial institutions. Rankings and roundups are completely objective, and no institution, client or otherwise, paid for inclusion or specific placement. Any opinions, analyses, reviews or recommendations expressed in this article are those of the author alone and have not been reviewed, approved or otherwise endorsed by the companies included in the article. All fees and rates are subject to change at the issuers’ discretion. Some interest rates might be short-term or promotional offers only, and it is possible additional terms and conditions must be met to obtain the interest rates listed. Rates and availability might vary by region. Verify terms and conditions before opening an account.

GOBankingRates bases its assessment of “best” and “top” products on the above-stated parameters to create a baseline for comparison. This assessment is an approximation of “best” and “top” designed to help consumers find products that might be appropriate for them. There could be other options available as well. Consumers should consider various options appropriate for their circumstances.

This article originally appeared on GOBankingRates.com: 7 Best Personal Lines of Credit