• A line of credit is a revolving loan which is available for use as the borrower chooses. Lines of credit are available to individuals and businesses. Homeowners may also have access to a line of credit based on the equity in their homes. Interest on a line of credit is due only on the amount that is outstanding at any given time. As payments are made, the available credit is restored by the amount of the payment, less interest. Lines of credit can provide financial flexibility for both individuals and businesses.
  
  

Financial Emergencies

• A line of credit can be a life raft when an emergency strikes, such as an unexpected accident or illness. A line of credit can also serve as a means of bridging a temporary job loss, however, it's best to avoid using a line of credit for everyday expenses if at all possible. If personal or business finances have deteriorated to the point that income does not meet basic obligations, financial counseling is more prudent than drawing on a line of credit.
  
  

Household and Business Investments

• Home remodeling projects with a high rate of resale return are an excellent use of a line of credit. Purchasing inventory or making capital investments are both excellent means for a business to make use of a line of credit. Any expenditure that has a reasonable probability of paying for itself or generating income in the future can be a wise use of a line of credit.
  
  

Bill Consolidation

• Some advisers warn against using a line of credit to pay off bills, however, if you have high interest credit cards, using some or all of the available funds in a line of credit can result in dramatically lower overall payments. This is because the interest on a line of credit is typically much lower than that for credit cards. The key is not to incur further debt, and to make consistent payments on the line of credit.
  
  

Education and Training

• Using a line of credit for further education can be a wise investment. However, grants, scholarships and federally-guaranteed student loans should be the first line of funding for higher education, with a line of credit serving as a supplemental source of funds. Similarly, a line of credit can cover the cost of training and seminars, the cost of which is often being tax deductible.