A personal line of credit is an arrangement with a bank or credit union to make credit available to a borrower on demand, up to a predetermined limit. It can be thought of as similar to a home equity line of credit (HELOC), with the significant difference that it is not secured by equity in a home, or by any collateral.
Once approved, the borrower has access to an agreed-upon amount at any time during a prescribed time period, after which the personal credit line may have to be repaid, reviewed or renewed. When credit is accessed, the borrower must make at least a minimum monthly repayment, and an interest rate is charged on any remaining balance. This interest rate is set initially when the credit line is first granted, but may be reset periodically. There may also be a fee each time the credit line is accessed.