Personal line of credit vs. credit card

Personal lines of credit and credit cards are both types of revolving credit that offer a flexible way to borrow money. But they’re two different types of credit accounts. Learn more about how these two options compare.

Key takeaways

  • Personal lines of credit and credit cards are both types of revolving credit with flexible borrowing options.

  • Lines of credit offer a set amount of credit that you can borrow and repay as needed within the account’s terms.

  • Credit cards offer a line of credit that you can access with a physical card or virtual card number. They also may come with different rewards and APR options.

  • Lines of credit and credit cards may have different interest rates, credit requirements, fees and more.

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What is a line of credit?

Lines of credit, sometimes called credit lines, are loans that give the borrower access to a set amount of money called a credit limit.

There are several types of lines of credit. Some, such as business lines of credit and home equity lines of credit, have specific uses. Others, like personal lines of credit, tend to be for general purposes. There are also government-backed lines of credit that function in their own ways.

With a line of credit, you can borrow against the limit and make repayments as needed within the account’s terms and conditions. To access a personal line of credit, you can write checks or request a bank transfer to your checking account. The lender typically charges interest on the outstanding balance and may charge a fee for using the account.

What is a credit card?

A credit card is another type of revolving credit available from many banks and credit unions.

When you apply for a credit card, the credit card issuer reviews your creditworthiness to determine whether to extend a credit line and decide on things like your credit limit and interest rate. If approved, you receive a credit card you can use to make purchases. And at the end of each month’s billing cycle, you’ll receive a statement that shows information like how you used the card, your minimum payment for that month and what you owe in total.

What’s the difference between a line of credit and a credit card?

According to the Consumer Financial Protection Bureau, lines of credit and credit cards have similar features. But there are a few differences.

Credit limit access

Lines of credit and credit cards both have credit limits. But how you access the money differs.

With a line of credit, you can usually access the account using checks, bank transfers or a card. On the other hand, a credit card gives you access to the credit limit simply by swiping, tapping or dipping. Virtual cards and other digital options might also be available.

Interest rates and fees

Lines of credit and credit cards typically have different interest rates. And compared to credit cards, you might see lower rates on lines of credit.

Both personal lines of credit and credit cards may have annual fees. But you could also be charged a fee each time you use a personal line of credit.

Borrower qualifications

To get a line of credit, you may need to have a checking account with the lending bank or credit union and be able to prove your creditworthiness. To get approved for a credit card, you don’t have to have an existing account with the card issuer.


Rewards programs set credit cards apart from lines of credit. Different types of credit cards may earn cash back, points or miles. You can redeem them for a variety of things and experiences.

Unlike rewards credit cards, personal lines of credit typically don’t offer rewards.

Is it better to have a line of credit or a credit card?

When it comes to one type of revolving credit being better than the other, there isn’t a definitive answer. Benefits and loan terms, including interest rates, on a personal line of credit or a credit card can vary. And they might depend on the lender and things like an applicant’s income, debt, credit scores and more.

If you’re considering either option, doing some research might help you decide what’s best for your situation.

Personal lines of credit vs. credit cards in a nutshell

If you’re looking for a flexible way to borrow money, a personal line of credit or credit card are two options to consider. Comparing the interest rates, fees and repayment terms of any agreement could help you make the best decision when deciding on a borrowing option. No matter which option you choose, make sure you’re applying for something that’s right for your situation.

Think a credit card might be right for you? With pre-approval from Capital One, you can find out if you’re eligible for credit cards before you apply. It’s quick and won’t hurt your credit scores.

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