We are independent & ad-supported. We may earn a commission for purchases made through our links.
Advertiser Disclosure
Our website is an independent, advertising-supported platform. We provide our content free of charge to our readers, and to keep it that way, we rely on revenue generated through advertisements and affiliate partnerships. This means that when you click on certain links on our site and make a purchase, we may earn a commission. Learn more.
How We Make Money
We sustain our operations through affiliate commissions and advertising. If you click on an affiliate link and make a purchase, we may receive a commission from the merchant at no additional cost to you. We also display advertisements on our website, which help generate revenue to support our work and keep our content free for readers. Our editorial team operates independently of our advertising and affiliate partnerships to ensure that our content remains unbiased and focused on providing you with the best information and recommendations based on thorough research and honest evaluations. To remain transparent, we’ve provided a list of our current affiliate partners here.

What is a Cash Line of Credit?

Nicole Madison
Updated May 16, 2024
Our promise to you
SmartCapitalMind is dedicated to creating trustworthy, high-quality content that always prioritizes transparency, integrity, and inclusivity above all else. Our ensure that our content creation and review process includes rigorous fact-checking, evidence-based, and continual updates to ensure accuracy and reliability.

Our Promise to you

Founded in 2002, our company has been a trusted resource for readers seeking informative and engaging content. Our dedication to quality remains unwavering—and will never change. We follow a strict editorial policy, ensuring that our content is authored by highly qualified professionals and edited by subject matter experts. This guarantees that everything we publish is objective, accurate, and trustworthy.

Over the years, we've refined our approach to cover a wide range of topics, providing readers with reliable and practical advice to enhance their knowledge and skills. That's why millions of readers turn to us each year. Join us in celebrating the joy of learning, guided by standards you can trust.

Editorial Standards

At SmartCapitalMind, we are committed to creating content that you can trust. Our editorial process is designed to ensure that every piece of content we publish is accurate, reliable, and informative.

Our team of experienced writers and editors follows a strict set of guidelines to ensure the highest quality content. We conduct thorough research, fact-check all information, and rely on credible sources to back up our claims. Our content is reviewed by subject-matter experts to ensure accuracy and clarity.

We believe in transparency and maintain editorial independence from our advertisers. Our team does not receive direct compensation from advertisers, allowing us to create unbiased content that prioritizes your interests.

A cash line of credit is a type of revolving credit line. When a person has one, a bank or other financial institution extends a specific amount of credit from which he can borrow as he pleases. The borrower may draw money from the cash line of credit as often as he needs to, as long as he does not exceed the maximum credit amount set by the financial institution. When he repays the money he withdrew, however, the line of credit is not closed, as would be the case with a basic loan. Instead, the line of credit typically remains open for the borrower to withdraw from in the future.

To understand this concept, it may help to consider an example in which a person has a cash line of credit worth $5,000 US dollars (USD). In such a case, the borrower may first withdraw $2,000 USD to make repairs in his home and then later withdraw $500 USD for car repairs; this means he still has $2,500 USD to use when and how he wishes. When he repays the $500 USD he borrowed, he will have $3,000 USD from which to withdraw. Once he pays the entire amount back, he will have $5,000 USD as his line of credit once more. He usually does not have to repay the money he borrows before he can borrow more, but he does have to follow the borrowing and repayment terms set by his financial institution.

A cash line of credit is often unsecured. This means the borrower doesn’t have to provide any collateral to obtain an unsecured cash line of credit. In some cases, however, a line of credit is secured with some type of collateral. For example, a person may receive a loan against the equity in his house and take a line of credit instead of a lump-sum payment. In such a case, the borrower’s home would be the collateral for the line of credit.

Sometimes people prefer cash lines of credit to traditional loans because of the manner in which interest is handled. With a cash line of credit, a person isn’t charged any interest until he actually uses some of the money in the credit line. Many people also appreciate the fact that cash lines of credit are usable whenever they are needed, without having to reapply or ask the financial institution’s permission.

SmartCapitalMind is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Nicole Madison
By Nicole Madison
Nicole Madison's love for learning inspires her work as a SmartCapitalMind writer, where she focuses on topics like homeschooling, parenting, health, science, and business. Her passion for knowledge is evident in the well-researched and informative articles she authors. As a mother of four, Nicole balances work with quality family time activities such as reading, camping, and beach trips.
Discussion Comments
By Sara007 — On Jan 14, 2012

Do you know if there are any good cash loans for a small business that offers a really good interest rate?

My husband and I are thinking about expanding our home business and really want to get some small business financing so that we can make more profit in the future. I know that a lot of business loan rates vary from bank to bank so I would love any suggestions.

We generally want to focus on buying some new equipment to work with and renovating our workspace. We need new computers and cash for more advertising. We can get a good deal on most of what we need if the cash is on hand.

By popcorn — On Jan 13, 2012

@manykitties2 - I would definitely not put your repairs on your credit cards. I am not sure if most people know how bad credit cards are for interest rates but your line of credit is going to give you a much better rate. The thing about refinancing your home is also tricky because you are losing a lot of the equity in your home when you do this.

Your best bet would be to read the fine print on your cash line of credit and see if anything sticks out at you as problematic. Once you feel comfortable sign away and get your repairs done. There is no sense freezing if you can help it.

By manykitties2 — On Jan 12, 2012

My bank recently offered me a cash revolving line of credit for some repairs I wanted to do on my home and I am a bit cautious as to whether or not I should take the offer. Is the interest on cash lines of credit cheaper than a credit card? Is there anything I should look out for before signing anything?

I really want to get my house fixed up quickly as we need to put in a new heater and it is getting really cold here. My other options are to refinance my home or to put the repairs onto various credit cards.

Nicole Madison
Nicole Madison
Nicole Madison's love for learning inspires her work as a SmartCapitalMind writer, where she focuses on topics like...
Learn more
SmartCapitalMind, in your inbox

Our latest articles, guides, and more, delivered daily.

SmartCapitalMind, in your inbox

Our latest articles, guides, and more, delivered daily.