Is a Line of Credit worth it? Factors to consider

Is a Line of Credit worth it? Factors to consider

31 January 2024 | By INDIE

The concept of a line of credit is gaining prominence in the realm of personal finances. The flexibility and convenience it offers are unmatched by any other form of credit and borrowing. With a line of credit, you can borrow funds anytime, multiple times, and pay interest only on the used funds. Learn the intricacies of a line of credit, outline essential features, and understand its suitability before you apply for a credit line.

What is a Line of Credit? How does it differ from a personal loan?

A line of credit is a financial arrangement wherein a bank extends a maximum loan balance to an applicant. Unlike a lump sum personal loan, a line of credit provides access to a predetermined credit limit, from which the borrower can draw funds as and when needed. This flexibility distinguishes it from conventional personal loans.

With a personal loan from a bank, you receive a fixed amount upfront, and interest accrues on the entire sum from the outset. On the contrary, a bank line of credit, such as from IndusInd Bank’s INDIE mobile banking app, allows you to borrow and pay interest only on the amount utilised. This adaptability makes a line of credit an attractive option for those seeking intermittent or variable financial support.

With INDIE, you can enjoy the flexibility of accessing higher credit limits of up to ₹5 lakh with low-interest rates. Additionally, you get extended repayment tenures ranging between 3 months to 36 months. The best part is your credit line application is completely online through the cutting-edge INDIE app with zero physical documentation. 

Important factors to consider while applying for a line of credit

1. Interest rates: Evaluate the interest rates associated with the line of credit. They may vary based on factors like your credit score. A lower interest rate can significantly impact the overall cost of borrowing.

2. Credit limit: Ensure the credit limit offered aligns with your financial needs and potential borrowing requirements. A higher credit limit such as that offered by INDIE provides more flexibility. Note that easy access to a high credit limit is helpful but also requires responsible financial management on your side.

3. Fees and charges: Check the terms and conditions for any hidden fees or charges. Common elements include annual fees, processing fees, and penalties for late payments. A clear understanding of these can prevent unwelcome financial surprises. INDIE offers complete transparency on charges and fees levied before you opt for a credit line.

4. Repayment terms: Go through the repayment terms, including the minimum monthly payments and any penalties for late payments. Clear terms contribute to a smoother borrowing experience.

5. Secured vs. unsecured line of credit: Understand the distinction between secured and unsecured lines of credit. While a secured line requires collateral, often in the form of assets, an unsecured line of credit is granted based on creditworthiness and your repayment history. Each has its merits and demerits, depending on your financial standing.

When is it ideal to use a line of credit?

A line of credit is an apt choice under several circumstances such as:

1. Variable expenses: If your financial needs fluctuate, a line of credit from INDIE can provide a flexible solution. Whether for home improvements, educational expenses, or unexpected medical bills, the ability to access funds as required is invaluable.

2. Emergency fund buffer: You can consider a line of credit as a supplemental emergency fund. While you may have savings for urgent needs, a line of credit can act as an additional safety net during unforeseen circumstances.

3. Business ventures: For entrepreneurs and small business owners, a line of credit can be instrumental. It allows for quick access to capital when necessary, aiding in managing cash flow effectively.


The decision to opt for a line of credit depends upon individual circumstances and financial objectives. Considering the ease and flexibility, a credit line suits a wide demographic of individuals. IndusInd Bank’s INDIE app takes this convenience and flexibility to the next level by providing a complete online platform to access, manage, and repay borrowings. Need instant credit line? Apply for a line of credit on INDIE today and empower yourself financially.

Disclaimer: The information provided in this article is generic and for informational purposes only. It is not a substitute for specific advice in your circumstances. Hence, you are advised to consult your financial advisor before making any financial decision. IndusInd Bank Limited (IBL) does not influence the views of the author in any way. IBL and the author shall not be responsible for any direct/indirect loss or liability incurred by the reader for making any financial decisions based on the contents and information.