Best Credit Lines in Singapore (2020)

What is the purpose of a credit line?
A credit line (also known as line of credit) is a type of unsecured loan that allows you to draw on funds when you need it, at up to 4 times your monthly income. Unlike a personal loan where you lock in your loan amount, tenure and interest rate upfront, a credit line charges interest only on the amount you drew down. You also pay fees for opening and maintaining a credit line.

Why do people use a credit line?
A credit line provides flexibility, especially when you need to borrow money multiple times. Rather than taking up a few different personal loans, a credit line allows you to borrow from the same credit account up until the given credit limit.

Read more: 3 advantages of a credit line and how they can benefit you.

What are the downsides to using a credit line?
A credit line could lead to over-borrowing. There are a couple of situations where a credit line might not be ideal:

• You know how exactly much you need to borrow and you know there won’t be stark changes to the situation that called for the loan.
• You are a spendthrift or if you lack discipline. Having access to additional funds that you might not require could tempt you to borrow more than you need. With no fixed repayment period, you could end up snowballing your interest by delaying repayments.

In such scenarios, a personal loan could do the trick.