Line of Credit vs. Credit Card

A line of credit is usually better when you need to borrow a larger amount and want a lower interest rate than most credit cards.

A credit card is usually better for everyday purchases, especially if you pay it off in full each month to avoid interest and earn rewards.

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.

How They’re Similar

Both a line of credit and a credit card are “revolving” credit, which means:

• You get a credit limit

• You can borrow, repay, and borrow again

• Your balance and payments can affect your credit

The Biggest Differences

1) What you use it for

Credit card

• Best for daily spending (groceries, gas, subscriptions)

• Good for online shopping and travel

• Often comes with rewards

Line of credit

• Better for bigger costs (repairs, emergency expenses, cash flow gaps)

• More useful when you need to carry a balance for a while

2) Interest and when it starts

Credit card

• Usually has an interest-free grace period on purchases if you pay the statement balance in full

• Can get expensive fast if you carry a balance month to month

Line of credit

• Often charges interest as soon as you borrow

• Can be cheaper than credit cards for longer payback timelines

3) Monthly payments

Credit card

• You must make at least a minimum payment each month

• Paying only the minimum can keep you in debt for a long time

Line of credit

• Payments are often more flexible, but you still need a plan to pay it down

Which One Should You Choose?

Pick a credit card if:

• You can pay it off in full every month

• You want rewards and purchase protection

• You mainly need it for everyday spending

Pick a line of credit if:

• You might need to borrow a larger amount

• You want a simpler way to borrow for a short-term need

• You want a potentially lower-cost option than carrying a credit card balance

Some people use both:

• Credit card for daily spending (paid off monthly)

• Line of credit as a backup for larger, rare expenses

Quick Tips to Avoid Debt Problems

• Borrow only what you can realistically pay back

• Set a payoff target (example: “I will pay this off in 6 months”)

• If you start carrying balances, pause extra spending until you catch up