Lines of Credit vs. Credit Cards—what’s the Difference?

Posted February 17, 2021 by in Lifestyle

The majority of people dream about being debt-free, but depending on your situation, borrowing money might be the best choice. Having credit can be really helpful when you have an emergency, want to refinance a student loan, or even perform some home upgrades. In this regard, there are many options you can choose from. In this article, we will focus on comparing the difference between applying for a credit card vs. applying for a line of credit.

Deciding between a credit card vs. a line of credit might be a difficult choice since they are both classified as revolving credit. This means that when you start paying up your balance, you will free up more funds. Plus, you will also have to cover the interest rate over the balance you are carrying. Then you might wonder, is there a difference between a line of credit and a credit card?

The difference between these two credits products is their goal. While a line of credit is perfect to cover large expenses, a credit card works better for short term financing. But to choose a line of credit vs. a credit card, you also need to consider the interest rates, convenience and application process, among other things.

That’s why to decide the future of your finances, you need all the tools. Below, we have gathered all the information to help you choose the best credit option for you:

What is a Line of Credit?

When your line of credit is approved, this means you will be able to borrow a determined amount from your lender. The total you borrow could go up to $50,000, but most lines of credit offer a smaller amount. Remember, the overall budget and restrictions will depend on your lender. 

As we explained before, this is a revolving credit, which means you can cash out any amount you want without going over the limit. Also, the interest rate will only apply to the amount you borrow. If you decide to get a line of credit, you can use the money for expenses such as medical bills, educational expenses or even refinance bigger loans.  

In the next section, we will take a brief look at how to get a line of credit. 

Applying for a Line of Credit

When you choose to apply for a line of credit, you will need to pick between a secured or unsecured one. For either of them, your lender will mandatorily check your financial status and credit history. That way, they will determine if you are eligible for the credit. However, in an unsecured line, you only have to prove your capacity to respond, while in the other one, you’ll need to put up collateral.

The most popular line of credit is called the Home Equity Line of Credit (HELOC). To get a HELOC, you will have to put your property as collateral. But the advantage is that you will get money according to the equity available at the moment. We strongly recommend this option since it is the best one in the market. To learn more about a HELOC and how it works, visit Alpine Credits.

What is a Credit Card?

Chances are that if you are looking into ways to finance your daily living, you are already familiar with credit cards. Usually, the limit of credit cards varies depending on your financial situation. But if you have a stable income, you could have a limit between $5,000 and $10,000.

Credit cards are not your best friend if you plan to charge expensive things to your accounts, such as big appliances and some electronics. The way you should use a credit card is to pay for things you can afford with your income. For instance, groceries, meals and even clothes. Also, one of the perks of having a credit card is that you could accumulate points and earn rewards.

Applying for a Credit Card

To get a credit card, you can go to any bank and open an unsecured account. In the process to approve your credit card, the bank will check your credit history. Once it is approved, you will get a credit card line of credit. You will be charged a monthly balance depending on how much you will spend. If you decide to carry the balance, you will also have to cover the interest rates. Otherwise, in case, you can repay the entire balance by the due date, there won’t be any interest.

If you are still not sure which credit product to choose. Here we will explain the difference between a line of credit and a credit card.

Credit Card vs. Line of Credit: The Difference

Since we already know the way each product works (credit card, line of credit). Now we are going to take a closer look at their differences:

Interest Rates

The main difference between a credit card vs a line of credit, is that the first one has higher interest rates. That’s why if you are used to carrying your credit card balance for several months, a line of credit will be more affordable in the long run.

In case you have both credit products, you could unify them by transferring the debt you have in the credit card to your line of credit.


When it comes to convenience, a line of credit vs. a credit card will always lose the battle. There is nothing more convenient than a credit card whether you want to pay for meals, clothes, hotel bills, among others.

Doing a Cash Advance

Lines of credit are great for doing a cash advance since they have low borrowing costs. On a credit card, a cash advance will be more costly, and in some cases, you might have to pay for additional charges. That’s why if you plan to do several cash advances, we recommend applying for a line of credit.

Easy Rewards

Even though a line of credit might be the best option, most of the time, a credit card has an extra benefit, rewards. With the rewards or points you accumulate, you could apply them to your travel packages or even air miles. 

Man holding a white credit card and thinking deeply.

We hope this information has helped pick the right credit product for you!

*Photos by Sora Shimazaki