Pros and Cons of a Personal Line of Credit

A personal line of credit (PLOC) is a flexible borrowing tool that gives you access to a set limit you can draw from when you need it—then pay back and reuse, like a reusable loan.

It’s great for managing cash flow, but it can also be risky if you’re not careful.

KOHO Line of Credit

If you like the idea of on-demand borrowing with fewer surprises, the KOHO Line of Credit is designed to be simple and transparent:

• Apply online for about $1,000–$15,000 in available credit

• Get interest rates as low as 19.9%

• Only pay interest on what you actually use, not on your full limit

• Avoid extra charges—no late, annual, or origination fees, just the interest on what you borrow

• Apply without a hard credit hit; checking if you qualify won’t impact your credit score.

Pros of a Personal Line of Credit

1. Flexible Access to Funds

You’re approved for a limit and can borrow as needed—no need to reapply every time like with a personal loan.

2. Pay Interest Only on What You Use

You’re charged interest on the amount you’ve actually borrowed, not the entire limit. If your balance is $0, you’re not paying interest.

3. Reusable Credit

As you repay what you’ve used, your available credit replenishes, so you can borrow again without a new application.

4. Helpful for Cash Flow and Emergencies

A line of credit can be handy for:

• Unexpected expenses

• Short-term income gaps

• Smoothing out irregular cash flow

Used with a clear plan, it can prevent you from relying on high-interest credit cards or payday loans.

Cons of a Personal Line of Credit

1. Easy to Overspend

Because the money is always there, it’s tempting to treat it like extra income instead of debt. That can lead to:

• Carrying a balance for months

• Paying more interest than you expected

2. Payments Can Stretch Out

If you only pay the minimum or small amounts, the balance can linger and cost more over time, especially at higher rates.

3. Can Hurt Your Credit if Mismanaged

Missed or late payments and high utilization can:

• Lower your credit score

• Make future borrowing more expensive or harder to get

4. Not Ideal for Long-Term, Large Debts

For big, long-term needs (like a large renovation over many years), a fixed-rate term loan or mortgage-style product can sometimes be a better fit than an open, revolving line.

When a Line of Credit Makes Sense

A personal line of credit can be a good fit if:

• You have irregular expenses or income and want a safety buffer

• You can budget around it and avoid treating it like free money

• You plan to pay down what you borrow fairly quickly, not carry it for years

If you know you’d be tempted to max it out and only pay the minimum, it’s worth pausing and building a clearer plan first.