Credit Calculator: Taking up money from a lender for a business to grow is common. Many sudden
wants appear while walking in the path of successful businessman/ woman.
Emergencies may pop up or any thing else which needs a ready access to
transaction over cash.

There are people who couldn’t determine which one will suit them, is it the line of
credit or expenditure through credit card. The determination for which one to opt
for depends upon the credit score, the needs for fund and also the business type
that a person is into.

So today let’s dive into the comparison between line of credit and credit card.

Line of credit vs. Credit card of Canada

The Line of credit is the account through which one is able to take out money. The
borrowers will be allowed a fixed credit limit. Above the credit limit, none can
borrow. For minimum withdrawal, there isn’t any limit, but the credit limits
maximum.

The repayment involves only that much amount which has been taken away by
the borrower under a specific tenure of repayment. The only amount borrowed
charges interest and not on the total credit. As soon as the borrower pays back
the borrowed amount, s/he is able to borrow the money over and over again
anytime, there’s a need for some additional cash. The Canada rates for line of
credit is till 5%.

There are two types of lines of credit, one is secured LOC and the other unsecured
LOC. The secured line of credit comes against any particular asset of the
borrower. This LOC can be easily granted by the lender with lower interest rates
and attractive deals. But if in any way, one fails to pay back, the asset of the
borrower will be snatched away by the lender.

The unsecured LOC however does not require any collateral of the borrower. The
amount of risk involved in it is much more for the lender. For this reason, to be
granted for this loan, the borrower will need to have good credit score and pay
higher interest rates.

The Credit card being a tool for finance, permit the users to purchase anything
they want without the need to pay at that particular point till a said credit limit.
The repayment needs to be done by the users on a monthly basis. The average
rate of interest for credit cards in Canada is 19%

These cards usually come with higher rates of interest but offers much less a limit
if compared with line of credit. The advantage of using credit cards is that, the
user receive rewards for each purchase unlike line of credit.

The thing is that, line of credit suits for cash advances to the best but credit cards
fit for regular payments.

Line of credit vs. Credit card interest calculator

In order to borrow money via Line of credit, one will definitely be charged
interest. To calculate the repayment of this credit along with the interest requires
a calculator. The borrower will have to input some details which are the
borrowing reason, the amount borrowed, interest rate, the span of period
allowed for repayment and the frequency of loan payment.

Once and for all you enter the details and click on ‘results’, you’re going to seek
through the estimated value. The interest is charged at various intervals and
payment is allowed to make anytime.

The business credit card is a revolving line of credit that are used to buy. The
credit card owners have to pay an annual interest and also fees. In order to
calculate the interest charged by the credit cards, and how much to repay, we
require a calculator.

The details which the calculator will ask for are the total amount taken as loan by
the borrower, the annual percentage rate or APR, the interest charges, the
number of payments every month and the given amount of time to repay. No
sooner we enter all these details, we tend to get the results after which we are
just to add the fees and hence the borrower gets his/her designated result.

The credit card lenders often charge higher rates of interest and also fees for the
cash advances but lines of credit allows the borrower pay the fixed and definite
rate of interest.

Line of credit vs credit card debt

Line of credit is a type of any financial institution’s issued debt which highly is
based on the want of the borrower, his/her credit score. LOC is not meant for a
single time purchase instrument, but they serve those purpose which the banks or
any other credit union do not.

Lines of credit is a debt that is helpful for repetitive cash outlays. It is generally
known to finance the improvement program of a home or any refurbishment
projects. Like a traditional personal loan, it needs credit that is acceptable and
unlike loans, it will take back only the amount which has been spent along with
interest.

Similar enough to a loan, repeated usage and paying back of Line of credit may
increase the borrower’s credit score.

The credit card debt is a kind of non-secured liability which is sustained by
revolving loans of credit cards. The borrowers will be gathering credit card debt
by unfolding many credit card accounts with different terms and limits set on the
credit.

The person who has borrowed, his/her credit card accounts will reported and
tracked by credit agencies.

The credit card debt is helpful for purchasable items over time, it carries high
interest rates for few industry. Credit card debt applies for a notable part of
utilization of credit on the profile of the person who borrowed. Also, in order to
increase the credit score, paying back the outstanding credit card debt in no time
is the best way.

The Americans have $6,194 in their credit card debt in whole. This is in
accordance to the 2019 Experian Consumer Credit Review. Whereas, the Alaskans
tops the table with the largest credit card balance, on a whole, around $8,026.

Line of credit vs. Credit card RBC

The royal credit line is a fixed, minimum costing way to take out money or borrow
it. One may save a good amount of dollar each year also in an easy way manage
the line of credit from the Royal Bank.

The rates charged for the interest is typically low than any credit card that too with
nil annual fee. The withdrawal of money through ATM can be accessed 24×7 by just
writing down cheques from the borrower’s account or can also be easily transferred
via RBC Online banking.

Here, the borrower if wanted may lower down the credit limit and shut down
his/her account at their wish through RBC online banking. There is a chance of
reusing the credit that’s available once, the borrower pays the balance. No
requirement of re applying.

The borrower is also given the allowance to make vivid changes to the payment
amount, account, frequency or even the due amount of payment via RBC online
banking.

The Royal Bank Credit offers huge number of credit cards with multiple choice in
interest rates, benefits and the earning rewards in order to suit the definite life
style of the borrower. The interest rate is charged annually.

For keeping the credit card account at a good position, one will have to input
payments every month at the prescribed due date. This is the minimum or least
payment which each member will have to subtract from their pockets.

The annual fees and service/ rewards depends on the card which the borrower
has opted to take. Also, grace period is allowed to the customers for paying the
bill before interest charges are accrued on purchases. Whereas, the cash
advances do not have any grace period.

Click here to check out Credit Calculators.

The credit limit can be increased or decreased as and when the charges on the
credit card of RBC goes up or down.

Line of credit vs loan

Borrowing loan and line of credit from different financial lenders for various
purpose like business, personal etc. Both of it requires approval based on the
borrower’s credit score, credit history and also sometimes the relation between
lender and borrower.

The loans are a set amount of credit over which the borrower receives the right all
at once, where the person who borrowed pay off the debt which includes
principal and interest payment. But, unlike loan, a borrower has a repetitive
approach towards line of credit till it’s active state.

Similarly like lines of credit, the loans can also be of two types, either it’s secured
ones or unsecured. The secured loans are granted to the borrower by the lender
against a perfect asset which will be seized by the lender, if the borrower fails to
repay

But the unsecured loans doesn’t have any kind of collateral behind them,
therefore it’s risky at the lender’s end. The interest rates for this loans are
competitively higher than secured ones for it’s obvious nature.

The line of credit some time perform as checking accounts, which defines that
when the borrower buys anything, s/he can avail the payment through a debit
card that is linked to the line of credit. In option to that, the borrower may even
write off cheques against the line of credit for any intended purchase.

The different types of loans are mortgage, automobile loan, debt consolidation
loan, home improvement loan, student loan and business loan.

The different types of lines of credit are personal line of credit, home equity line
of credit and business line of credit.

Line of credit example

To understand line of credit in a broader manner, we may take the help of an
example. Let’s assume to have a balance sheet.

In that sheet, X company short term borrowing was $1,099 million in the year
2017. In the notes to account, further details of this short term borrowing has
been mentioned. Over there we note that X company had been in the
commitment of line of credit for the business with around 23 Institutes, the total
of which is $15 billion as on the date of 31st January, 2017.

They also wrote in that note, they had expanded both a 5-year credit facility and a
364-day revolving credit facility in the month of June.

Now, these lines of credit mature during a span on time which is May 2017 till
June 2021. The interest rate ranges from LIBOR plus 10 basis points and LIBOR
plus 75 points and also the expenditure of fees ranging from 1.5 and 4.0 basis
points.

In the conjunction with the LOC that is mentioned in this balance sheet, according
to which we may say, the company has agreed to few covenants, the most
restricted of that is the maximum amount of secured debt.

Therefore, now to conclude, let’s seek through the basic differences of these two,
which are credit card and line of credit.

The credit cards are mostly of unsecured nature, but the lines of credit are oftenly
secured as well as unsecured.

The credit cards gift the user of it certain reward program which the line of credit
does not provide their user with.
The line of credit interest rates are much lower in comparison to the credit cards,
but that too line of credit provide with much more credit limit than credit card.
The credit cards charge much higher APRs and also annual fees for cash advances,
but in the case of line of credit, it in all ways deal in cash.

Although, both line of credit and credit card are almost similar to each other,
these few differences make it different from the other. Based on these
differences, one might either choose line of credit or credit card that completely
depends on their situation.

I hope to make my readers understand line of credit as well as credit card from
different angles. This should make a reader have clarity within him/her self that
which is what. For, helping you in some bit, I feel obliged. Will you please make
me feel that you read, understood and liked the content through posting a
comment in that mentioned section? For doing so, I am so much thankful to you!
Take care.

 

Source: CONTRADICTION BETWEEN LINE OF CREDIT AND CREDIT CARD