Line of Credit vs. Credit Card
I am about conduct a local flip with a new partner. My financial obligation in the deal will be to provide the funding for rehab costs. While I have some cash for this, I was going to get a line of credit as a quick source of funding for emergencies, or if the rehab costs are more than I can pay cash for.
In my research however, I cannot see a reason to get a line of credit over a credit card. My findings show:
- Interest rates on unsecured lines of credit are higher than credit cards,
- Limit/credit amounts are about the same
- Credit cards are faster and easier to utilize during payments
- Credit cards through local credit unions make it extremely easy to get cash advances, and the fees associated with them are less than the difference in the higher interest rates of the line of credit.
- Lines of credit require checks, money orders, or cash for payment.
What am I missing? I know I must be over looking something because everyone talks about utilizing lines of credit as source for funds and payments.
What are the benefits of a line of credit over a credit card?
What are the down sides of a credit card over a line of credit?
Most Popular Reply
Everyone is talking about HELOC - home equity line of credit secured with your primary residence.
Unsecured line of credit is harder to get and it's not that advantageous as HELOC.
More of that, you need LOC for cash - like paying contractors. Credit card is good to buy materials, appliances etc, and it's usually 0% for a year or 18mo - on purchases. If you take cache via convenience check - there is fees upfront.
I wouldn't take cash advances - rates are at the ball ark of default - like 18-24%....why?!?
Especially if you do have done cash reserves.
Get credit card for purchases, cash to pay contractors and it's all good.