Best Personal Lines of Credit in 2021

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The right personal line of credit can help you complete large projects or make large purchases without the rigidity of personal loans or the big interest rates of credit cards. But which line gets you from point A to point B the quickest? Which offers the shortest distance from borrowing to payback, and which one doesn’t keep you hanging with big fees and small draw amounts? Using our straightforward SimpleScore methodology, we’ve rounded up the best lines of credit in 2021 to help you find the best fit for both current finances and the foreseeable future.

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But which line gets you from point A to point B the quickest? Which offers the shortest distance from borrowing to payback, and which one doesn’t keep you hanging with big fees and small draw amounts? Using our straightforward SimpleScore methodology, we’ve rounded up the best lines of credit in 2020 to help you find the best fit for both current finances and the foreseeable future.

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The 6 best personal lines of credit of 2021

Best personal lines of credit at a glance

APR Draw Period Limit
Truist Prime + 4.75% (8%) 4 years $500K 4.5
Citibank 8.24%–20.24% Continuous $25K 3.8
KeyBank 11.99%–17.74%, 12.24%–17.99% in OH Continuous $25K 4
Regions Bank 7.49%–17.49% Continuous $50K 4
PNC Bank 11.25%–21.65% Continuous $25K 3.4
US Bank 10.25% Continuous $20K 4.25

*Rates accurate as of December 2020.

Best for big expenses – Truist

SunTrust credit lines are light on fees and big on limits; just make sure you don’t get burned by shorter terms.

SunTrust ranks as one of the best personal lines of credit thanks to a substantial limit — up to $250,000 — which makes it a great choice for big-ticket home renovations or large purchases.

SunTrust offers the largest personal credit line limit on our list. Combined with no application or annual fees or restrictions on use (aside from paying down other loans or buying stocks and bonds), this line of credit is a great option if you’re dealing with large expenses or looking to tackle big home renovation projects. It’s worth noting that this is an unsecured credit line with a maximum term of four years, meaning you’ll need a solid spending and repayment plan to minimize the interest you pay over time.

In the News

In the News:

Truist Financial recently became the official banking partner of the National Football League (NFL). American Banker shared that the multiyear deal gives Truist the chance to showcase its new brand after merging BB&T and SunTrust in Charlotte, North Carolina.

Best for custom credit options – Citibank

If you need customizable credit access and you’ve got a solid credit score, it’s worth a trip to the Citi.

Citibank makes it easy to manage your personal line of credit with flexible financing options and fee waivers if you make at least one payment per year.

Citibank is all about options — borrowers can access anywhere from $1,500 to $25,000 credit lines and can skip the yearly fee if they make at least one payment each year. When it comes to APR, however, it’s worth doing your homework — depending on your creditworthiness, you could pay anywhere from 8.24% to 20.24%. That can add up big if you make a late payment.

In the News

In the News:

Citibank recently went to trial in an effort to get back nearly half a billion dollars after an accidental payout. Even though some of the money has been returned willingly, Citibank’s trial will determine if the money will be returned.

Best for balance protection – KeyBank

While this lender doesn’t have a lock on the personal credit line market, the key to its success is solid overdraft options.

APR

11.99%–17.74%, 12.24%–17.99% in OH

KeyBank personal lines of credit are middle of the road in many respects, but it offers the benefit of enhanced peace of mind — current KeyBank customers can use their line of credit as ongoing overdraft protection.

KeyBank’s personal lines of credit don’t require collateral and offer the benefit of flexible payment options, but low upper limits make them a less-than-optimal choice for many borrowers. The caveat? Built-in overdraft protection can help KeyBank customers rest easier knowing they won’t face additional fees if the balance goes too low.

Best for secured lines of credit – Regions Bank

While collateral damage could impact the amount you can borrow from Regions Bank, credit security is often worth the price of admission.

SimpleScore

4 / 5.0

SimpleScore Regions Bank 4

If a secured personal credit line is your priority, Regions Bank has you covered. The catch is you’ll need collateral.

Secured personal credit lines from Regions Bank offer the benefit of security but come with the requirement for collateral. Credit will be offered up to 100% of the collateral amount with a hard cap of $100,000, and pledged collateral will not be available for withdrawal.

In the News

In the News:

Regions Bank recently lost $31,550 in fraud from fake political action committee (PAC) checks across several states. Funds were contributed by Regional Bank employees to the PAC for public policy initiatives, The fraud attempt is believed to be external.

Best for straightforward spending – PNC Bank

PNC has potential if you’re looking for straightforward credit choices that won’t break the bank.

PNC makes it easy to apply for personal lines of credit with no collateral required and the ability to draw smaller amounts — as low as $50 — on-demand.

PNC isn’t the flashiest personal credit choice, but that’s the whole point. The ability to withdraw amounts as low as $50 on-demand makes this a great option for straightforward spending, and there’s no penalty for balance prepayment. Spend only what you need without fear.

In the News

In the News:

PNC Bank is also closing a number of branches across the country. So far, the bank’s branches have closed across seven states with plans to close a total of 280 branches by the end of 2021. Digital solution centers are being opened as an alternative for a traditional bank.

Best for easy access – US Bank

We’ll give credit where credit is due: US Bank makes accessing accounts easy anytime, anywhere.

Credit lines from US Bank make it easy to access your money wherever, whenever to cover key expenses or make purchases.

With a personal credit line from US Bank, you can easily access funds anytime, anywhere. Use your Visa Access Card, Personal Line Access Checks and ATMs — or opt for online, mobile or in-person banking. It’s worth noting, however, that the APR for US Bank credit lines is higher than average at 10.25%, which could be costly if you don’t pay your balance back on time.

In the News

In the News:

US Bank recently closed more branches in Kansas City, St. Louis and other areas of Illinois in an effort to consolidate the bank’s branches. The most recent closures total to 27. The bank’s closings account for an estimated 10% to 15% of its national branches in 2021.

What to avoid with a personal line of credit

Avoid borrowing more than you can repay: It’s easy to go overboard with a personal line of credit. You might find yourself opening the line of credit for a specific reason, such as debt consolidation or home improvements. But because the money is there, you find yourself using it for other expenses. Be sure that you only use the line of credit for the purpose you intended it for and that you only borrow what you can pay back in a reasonable amount of time.

Avoid missing payments: Missing a payment on any type of credit can have a huge negative impact on your credit score. Your payment history makes up 35% of your credit score, and delinquent debts remain on your report for seven years. Failing to make a payment could have long-term consequences.

Avoid a personal line of credit when there’s a better alternative: A personal line of credit can make sense in some cases, but it’s not always the right choice. If there are better alternatives available, try those first. For example, let’s say you’re considering a personal line of credit to pay a medical bill. Hospitals sometimes offer interest-free payment plans, meaning a personal line of credit would cost you extra money unnecessarily. Even a personal loan might be a better alternative, as long as the interest rate is favorable and there are few fees.

[Read More: Best Small Personal Loans]

Where to get a personal line of credit

Banks: Traditional banks are some of the biggest lenders of personal lines of credit. Though not all banks offer them, you won’t have trouble finding one that does. You may also be able to get a better deal through a bank you have a long history with. Be aware that banks tend to have more fees, and possibly higher interest rates, than other options.

Credit unions: Credit unions come with many advantages — lower rates, fees and lenient eligibility requirements. People with bad credit can typically find better approval rates for loans and lines of credit with credit unions.. If you’re a member of a credit union (or can become a member) this might be a good option to consider. Some credit unions have exclusive membership requirements, but you’ll likely be able to find one near you to join.

Online lenders: Online financial institutions are taking over a larger share of the lending market, including in the personal line of credit space. The advanced technologies these lenders use often means quicker decisions and quicker access to your money. These banks also often come with lower rates than traditional brick-and-mortar banks. The downside of this choice is that there’s no bank location to visit if you want to talk to someone in person.

What is a line of credit?

A line of credit is like a revolving door: Once you’ve repaid money withdrawn, you can use it again and again. It’s often considered to be a more flexible form of traditional loans — instead of getting the entire lump sum upfront, you can draw the amount you need, when you need it to minimize interest payments. In many cases, however, credit lines will have higher credit score requirements than their personal loan counterparts. Some personal credit lines may also require collateral, especially if they’re secured.

[ Read: What Is a Line of Credit and How Does It Work? ]

How lines of credit work

The concept of credit lines is simple: When you’re approved for a line of credit, you have access to any or all of the loaned balance.

But what does this mean in practice? Consider a $20,000 loan versus a $20,000 line of credit. Even if you only use $10,000 of the loan right away, you’re responsible for the interest on the entire balance of the loan. If you draw $10,000 on your line of credit, meanwhile, you’re only required to pay principal and interest on the amount you’ve withdrawn and can access this money again once you’ve paid the balance.

Many lines of credit have draw periods after which you’re no longer able to withdraw money but must instead pay down any outstanding balance.

Consumer loan vs. personal line of credit

Unlike a personal loan, which is when lenders offer a lump sum that must be paid back over a specific time period, a personal line of credit gives you access to funds as you need them — and you’ll only pay interest on the amount you’ve borrowed. A personal loan is a good choice if you know exactly how much you need upfront, while a line of credit might be better if you expect to have ongoing costs.

[ Read: Pros and Cons of Taking Out a Personal Loan ]

Types of lines of credit

There are three common credit line types:

  • Personal lines of credit — Personal credit lines are offered to individuals and are often used to pay for large purchases, schooling or home renovations.
  • Business lines of credit — Business credit lines are used by companies to purchase inventory, repair equipment or supplement current cash flows.
  • Home equity lines of credit (HELOCs) — Home equity lines of credit are secured loans tied to the value of your home. Typically, you can only borrow up to 80 percent of the assessed value of your home minus the amount still owing.

Benefits of a line of credit

A personal line of credit offers key benefits, including:

  • Reduced interest payments — Only pay interest on the amount you withdraw.
  • Reusable credit — Once you’ve paid your balance, you can access the credit again.
  • Repayment flexibility — Many credit lines allow you to replay balances early with no prepayment penalty.
  • Interest options — Some lenders will allow you to lock in some or all of your balance at a fixed rate to reduce interest payments. It’s worth noting, however, that you won’t be able to withdraw money from this fixed-interest portion.

Check Your Personal Loan Rates

Answer a few questions to see which personal loans you pre-qualify for. It’s quick and easy, and it will not impact your credit score.

How to get a personal line of credit

1. Check your credit score. Many lenders want good or excellent credit ratings to approve a line of credit application. Make sure your credit score is solid before starting the application process.

2. Select your preferred lender. As our best personal lines of credit roundup shows, not all credit options are created equal. Find the provider that best fits your needs and finances.

3. Complete the application process. While every lender differs, expect the application process to include questions about your current financial health, credit rating, assets and income. Make sure you have all this data on hand before beginning.

4. Understand the terms. Once you’ve been approved, read through the terms and conditions to make sure you know exactly what you’re paying and how it impacts your overall balance.

5. Have a repayment plan. While personal lines of credit offer better flexibility than personal loans, planning remains a priority. Track where you’ve spent your money and create a repayment plan to ensure you’re not stuck paying large interest amounts when the draw period ends.

[Read more: Best Secured Credit Cards ]

Personal line of credit FAQs

Some lenders will perform a hard credit inquiry during the application process, which may lower your credit score temporarily. Using your line of credit and paying it back as soon as possible can help build your credit rating, while carrying a high balance — or missing payments — can negatively impact your overall credit score.

While the required credit score depends on your lender, most unsecured credit lines require scores of 700 or above. Secured credit offerings, meanwhile, often have lower rating requirements but require collateral.

It depends. If you’re looking for access to credit on-demand with no draw period limits or minimum draw amounts, opt for a credit card. If you need cash for a large project and have plans to pay back the balance ASAP, the right line of credit could help reduce the amount of interest you pay over time.

We welcome your feedback on this article and would love to hear about your experience with the personal lines of credit we recommend. Contact us at [email protected] with comments or questions.



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