Credit & Debt

Lines of Credit

A line of credit is revolving borrowing that can be used, repaid and used again up to an approved limit.

4 min

Credit 101 • 10

A line of credit is reusable borrowing capacity.

You can borrow up to the limit, repay the balance and use the available room again.

You generally pay interest only on the amount you actually borrow.

Interest usually starts from the day you withdraw or use the funds.

Lines of credit often have

01A credit limit02A variable interest rate03A minimum payment04Reusable available credit05Secured or unsecured versions

A line of credit and a personal loan are different.

01

Personal loan

Usually provides one set amount with a repayment schedule.

02

Line of credit

Lets you borrow different amounts repeatedly up to the limit.

Repayment creates room again.

Limit$10,000
Borrowed$4,000
Available$6,000
Repay $1,000$7,000 becomes available

Flexibility can make debt easier to keep around.

Because the account stays open, there may be no natural ending point unless you create a repayment plan.

Before using a line of credit, know

01The interest rate02Whether the rate is variable03The minimum payment04Whether it is secured05Your plan to repay the balance

Remember this

A line of credit is flexible debt.

The ability to borrow again is useful, but it also makes a clear payoff plan more important.

Lesson complete

Reviewed 2026-08-18

Sources

Financial Consumer Agency of CanadaLines of credit ↗Financial Consumer Agency of CanadaLoans and lines of credit ↗
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