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A credit line is an ongoing form of credit that allows you to borrow money when you need it, rather than receiving a fixed lump sum upfront.
As long as you comply with the terms of your credit agreement, you can transfer funds of £25 or more up to your available credit limit at any time. This flexibility allows customers to tailor their borrowing to changing financial circumstances.
Polar Credit offers a flexible credit line designed to provide access to funds when needed, helping customers manage both planned and unexpected expenses. Polar Credit lines are often selected by people who are looking for an alternative to a bad credit loan. We accept applications from people with a poor or limited credit history, providing that you are confident that the repayments are affordable to you.
A credit line is a type of revolving credit. Unlike a traditional loan, where you receive a fixed amount and repay it over an agreed term, a credit line gives you ongoing access to funds up to an approved credit limit.
You can:
Common examples of revolving credit include:
The key difference is that a credit line typically transfers funds directly into your bank account, giving you flexibility over how the money is used.
Applying for a credit line is usually straightforward.
Customers apply for a credit limit through an online application.
If approved, a credit limit is assigned based on affordability and eligibility assessments.
You can transfer funds from your available credit limit directly into your nominated bank account whenever required.
At the end of each statement period, you will be required to make at least the minimum payment due. As you repay your balance, credit becomes available again for future use.
Unlike a traditional loan, you only pay interest on the amount borrowed rather than your full credit limit.
A credit line can be used for a variety of short-term, planned and unplanned expenses. It is important to make sure that you are confident you can afford to repay any amount you intend to borrow before applying.
We recommend using a credit line for essential purposes only, but ultimately, the credit line cash will be transferred into your bank account to be spent as you wish. Common examples of credit line use include:
Life can be unpredictable. Vehicle repairs, appliance breakdowns and emergency household costs can arise without warning.
A credit line can help bridge temporary gaps between income and expenditure.
Many people use a credit line for decorating projects, furniture purchases, repairs and smaller home renovation costs where funding may be needed gradually.
Customers with fluctuating income patterns may appreciate the flexibility that revolving credit can provide.
Withdraw money when required rather than borrowing a fixed amount upfront.
Interest accrues only on the amount borrowed rather than the total credit limit available.
Credit lines typically allow minimum monthly payments while also giving customers the option to repay more whenever possible.
As repayments are made, available credit can become accessible again without requiring a new application.
Applications are completed online and approved customers can access funds quickly.
While credit lines offer flexibility, they are not suitable for every situation.
Potential drawbacks include:
Before applying for any credit product, consider whether the repayments will remain affordable both now and in the future.
Although both provide access to borrowing, they work differently.
| Credit line | Traditional loan | |
|---|---|---|
| Credit type | Revolving credit | Fixed-term borrowing |
| Getting funds | Borrow as needed | Received once |
| Withdrawals | Flexible, when required | Single lump sum |
| Credit limit | Reusable as you repay | New application usually required |
| Repayments | Minimum payment flexibility | Fixed repayments |
A credit line may suit those who need ongoing access to funds, while a loan may be more appropriate for a specific one-off expense.
APR is an acronym for Annual Percentage Rate. Annual percentage rate is the rate of interest which is charged for your borrowing over one full year. For example, if you borrowed £100 for 12 months and it cost you £150 to repay at the end of the 12 months, then the APR on that loan is 50%.
However, when you make interim payments, for example minimum payments on a credit card, or short term loan instalment payments, you reduce the total amount of loan principal owing each time and so the amount of interest that accrues on your balance will also change. This is why APR can be misleading. It is one figure which represents an interest rate for one year, which means it might not be reflective of the actual amount of interest being applied.
Although a credit line is a revolving credit product which means the borrowing lifecycle can span many years, APR is not necessarily an accurate way of calculating the interest you actually pay as you are required to make minimum payments every month which includes the interest that accrued on the preceding statement period, any transaction fees and some of the principal amount borrowed. This means that the amount you have borrowed is constantly changing throughout the year so to apply one hard and fast percentage as a way of calculating how much it costs you will not always be accurate.
While you should not ignore the APR when comparing credit lines, there are other, more helpful indicators which can demonstrate how much interest will be applied.
For example, the per annum interest rate, sometimes noted as pa, will help indicate how much daily interest you will be charged. You can calculate the daily interest per £100 by dividing the per annum interest rate by the number of days in the year (365). For example, our representative example on our homepage uses a pa interest rate of 49.9%.
49.9 / 365 = 0.14, which means it will cost 14p per day to borrow £100 on a Polar Credit Line. If you borrowed £300 for example, you multiply the interest amount by 3 (300 / 100 = 3), to get 42p.
When comparing the cost of borrowing from Polar Credit to other providers, please also remember that we charge a 1.65% transaction fee on your withdrawal.
The annual percentage rate on a Polar Credit line will vary from credit line to credit line. On our website homepage, you will see a Representative APR of 68.7%. A Representative APR means that at least 51% of a lender’s customer base has that APR and the other 49% may have a higher or lower APR.
However, as we have demonstrated, the pa interest rate is an easier way to see how much your borrowing will cost you. At Polar Credit we value customer loyalty and we have a commitment to provide a sustainable credit product to help our customers manage their cashflow and rebuild their money management skills. This is why we will reduce the pa interest rate on your credit line by 10% after the first year of borrowing with us and then we will reduce the pa rate further by 5% every 6 months after that, until you reach our minimum interest rate of 29.9% pa. The APR will also drop as a result of the reduction in pa interest rate.
So, while a starting pa interest rate of 49.9% will mean you pay 14p per day for every £100 borrowed, at 29.9% pa, this drops to just 8p per day.
With Polar Credit you can pay more than the minimum payment to clear your balance sooner. Most credit lines allow customers to repay more than the minimum amount due.
Paying more than the minimum payment can:
While minimum payments provide flexibility, paying down balances as quickly as possible is generally the most cost-effective approach.
Depending on the lender and your circumstances, it may be possible to request a credit limit increase. Requests are usually subject to affordability and creditworthiness assessments.
A higher credit limit may help cover larger expenses, but it is important to ensure any additional borrowing remains affordable. Approval is never guaranteed and responsible lending assessments will always apply.
When comparing credit products, such as, overdrafts, personal loans or payday loans with a credit line, consider:
The right product depends on your individual circumstances and financial needs.
A credit line may be useful if you need flexible access to funds and prefer a borrowing solution that can adapt to changing circumstances.
However, credit should never be viewed as a long-term solution to ongoing financial difficulties or as a replacement for income.
Before applying, consider:
Used responsibly, a credit line can be a flexible financial tool for managing both expected and unexpected expenses. Should you need any additional support with financial difficulties, reach out to a free debt support service such as StepChange.
We created Polar Credit to provide access to credit in a fast, simple and transparent way.
Our credit line allows approved customers to:
We understand that customers value speed, simplicity and transparency when looking for credit, which is why our service is designed to make accessing funds as straightforward as possible.
A credit line is not the same as a loan. It is a form of revolving credit that provides ongoing access to funds, while a loan provides a fixed amount that is repaid over a set term.
Many customers use credit lines for smaller home improvement projects, repairs and renovation costs.
No. Interest is typically charged only on the amount you have borrowed, not your full available credit limit.
Most credit lines allow customers to make additional payments or repay their balance in full at any time. Polar Credit allows early repayment.
Making larger repayments can reduce the total cost of borrowing and increase available credit more quickly.
What are credit lines used for?
What is the difference between a credit line and a credit card?
Check out our other great content in our Info Hub, with articles about the different types of credit products, money management tips and help with saving money!