One of the best-kept secrets in the world of personal finance might just be the personal line of credit. It’s like a credit card in that you can borrow up to a certain limit determined by your credit union or bank, and that once you’ve paid off your balance, you can borrow it again if you need to. However, personal lines of credit also tend to have lower interest rates than credit cards and give you some more room to breathe if you use the line of credit for big-ticket items.

These features make a personal line of credit one of the most versatile financial tools in personal finance. They can help you achieve almost any kind of financial goal, including some you might not have considered.

How do you get the most from a personal line of credit?

Funding a Small Business or Side Hustle

While business loans are an ideal way for many entrepreneurs to get the funding they need for their small business, they aren’t the only option. If you’re starting a small business from a spare room in your house, for instance, you might just need a couple thousand dollars to buy some office equipment. This is where the personal line of credit comes in.

By only borrowing what you need, you can avoid large loan payments, not to mention having to pay the interest on the lump sum you usually get from loans. Even better, once you’ve gotten your business up and running, you can use the personal line of credit to grow your business at your own pace by funding marketing initiatives and buying equipment that will help you expand.

Taking Care of an Unexpected Expense

You probably know the importance of having an emergency fund to take care of any unexpected expenses that arise. What if you’re just started to live on your own and don’t have a lot of savings, though? Worse, what if you’ve already used your emergency fund to take care of another expense?

In these cases, a personal line of credit can act as a safety net. You’ll get immediate access to funds when you need them most, and while the amount you borrowed will generate interest, you’ll end up owing less than if you used a credit card.

Be prepared for any emergency. Apply for a personal line of credit!

Consolidating Your Debts

Nothing drags your finances down like debt, especially high-interest debt. However, when you consolidate your debts, you can not only lower the interest you’re paying, you also reduce the number of payments you have to make each month down to one.

While a debt consolidation loan can help you with debt that you’ve already accumulated, you might want to consider a personal line of credit if you suspect you’re going to have additional debt in the future. For instance, if you’ve spent more than you planned on a vacation and come back to discover your furnace doesn’t work, you can consolidate your vacation debt with a line of credit and then use the funds in your line of credit to pay for your furnace repairs.

Financing Home Renovations

A line of credit is an excellent way to finance a home renovation, from remodeling your bathroom to adding an addition. It offers greater flexibility than a loan, which can be a huge advantage if an unplanned expense arises.

While financial experts usually recommend a home equity line of credit to pay for home renovations, a personal line of credit is also an option, especially if you don’t want to use your house as collateral. You will have a higher interest rate than you would with a home equity loan, but if you’re even unable to make payments, you won’t have to forfeit your house.

Funding Education or Career Advancement

Investing in education or career advancement can significantly impact your future earning potential and personal growth. Whether it's pursuing a degree, attending professional development courses, or obtaining certifications, these endeavors often come with substantial costs. A personal line of credit can be a smart financial tool to help you fund your educational aspirations by helping you cover:

• Tuition fees
• Books
• Supplies
• Laptop
• Conference fees
• Testing fees

Got questions about personal lines of credit? Ask us!

Get a Personal Line of Credit at First Alliance Credit Union

A personal line of credit is your secret weapon to help you achieve financial success. It can help you cover the cost of everything from emergencies to home renovations, help you get your small business off the ground and even help fund your education. It’s also not a bad way to consolidate your debts.

If you’d like to take advantage of a personal line of credit, become a First Alliance Credit Union member today and talk with a member advisor. They’ll help you figure out if a personal line of credit is the best solution for your financial needs, and they’ll also give you advice on other financial options you might want to consider to achieve your goals. Once you have the personal line of credit, you can use our online banking system and mobile account to keep track of how much you’ve borrowed, and easily make payments from your First Alliance checking account or savings account.