People have been borrowing money and taking out credit for decades – in fact, in 1728 the first overdraft was granted – and as technology improves and demands change, creditors adapt to offer new products and new services to meet those ever-changing needs. One of the newest credit products to grace the financial services market is the credit line.
A credit line is a credit account which you can draw from at any time, up to your credit limit, to help you manage your cashflow needs and cover occasional emergency expenses.
There are a few main similarities between a credit card and a credit line, and these include:
Your credit limit will be determined when you make an application for a credit line. In the same way a credit card provider will do a creditworthiness and affordability assessment, so will a credit line provider because they have to make sure that their lending decision is responsible and that your borrowing is affordable in your financial circumstances.
One of the reasons credit cards are so popular is because you have the option of only making a minimum payment if you can’t afford to repay your balance in full at the end of your statement period, and the same goes for credit lines. At Polar Credit, we understand the importance of having a flexible repayment system which is why you can make your minimum payment one month, repay your full balance the next or simply make additional payments throughout the month to help reduce your total balance.
Credit lines do differ from credit cards in some ways, and for some people these differences make credit lines much more convenient:
When you withdraw cash from your credit line, the money is transferred directly into your bank account which means you can spend it using your usual debit card, or you can withdraw cash at an ATM without being charged a premium (usually about 3% or £3 if you withdraw cash from a credit card). As long as your bank supports the faster payments service (FPS), the funds will be in your bank account straightaway and your available credit updates instantly, so you aren’t left waiting for your credit card statement to finally update online to know what your current balance is.
There are several advantages to both a credit card and a credit line (and of course, there are disadvantages to both too) but they are also quite similar products too so it will depend on the provider as to why one product might be better than the other. For example, it’s worth checking the interest rate to find the right option that suits your circumstances.
It’s also important to remember that whenever you consider using credit products, you should always take into account what exactly you need the credit for. If you find yourself consistently in your overdraft or frequently looking at other borrowing options to help with day to day living expenses, then you may need to look at your budget and start reducing costs where possible. No one should have to be permanently in debt, and if you find yourself leaning that way, it might be worth getting in touch with a free debt advice service.
A Polar Credit Line works in the same way as any other credit line, with the added bonus of our proactive commitment to reduce your cost of borrowing over time. We will reduce your interest rate at your one year anniversary with us and then every six months thereafter until your interest rate reaches our minimum 29.9% pa, which is the same as most mainstream credit cards. This is because we feel that responsible borrowing and customer loyalty should be rewarded.
As well as same day approvals, fund transfers in minutes and accessibility 24/7, we want to make sure that our credit line is a sustainable credit product which helps you manage your cashflow from time to time without becoming another financial burden. You can find out more about a Polar Credit Line and our commitment to credit sustainability using the resources below.
Want to know more? Check out our Info Hub.