What Is a Line of Credit? A Complete Guide for Beginners

What Is a Line of Credit? A Complete Guide for Beginners

23 January 2024 | By INDIE

In case of urgent fund requirements, individuals tend to seek the most convenient and affordable ways to meet finances. In such cases, there are several credit options to choose from such as personal loans, credit cards, and more. While personal loans, being collateral-free and offering higher loan amounts, are popular options, a line of credit can be more viable if you are looking for flexibility and convenience. Let us understand the meaning, working, and the benefits of getting a line of credit.  

What is a line of credit?

A line of credit is a financial tool that offers a dynamic solution and a more adaptable approach to borrowing. It is a lending-borrowing arrangement that provides a predetermined credit limit, allowing you to access funds as needed. Unlike traditional loans, a line of credit is more like a financial safety net, giving you the ability to borrow, repay, and re-borrow as per your requirements.

How does it work?

Imagine you have been approved for a line of credit with a limit of ₹1 lakh. This doesn't mean you are obligated to borrow the entire sum upfront. Instead, you can use it as needed. Suppose you withdraw ₹30,000 to cover unforeseen medical expenses. You are now left with ₹70,000 in available credit.

Now, here's the beauty of the revolving credit nature of a line of credit – you start repaying the borrowed amount. Let's say you pay back the principal amount of ₹15,000. So, you have now increased your available credit back to ₹85,000. It's a continuous cycle of borrowing and repaying, offering unparalleled flexibility.

Understanding the requirements of varied individuals, IndusInd Bank’s revolutionary INDIE app offers quick access to a line of credit of up to ₹5 lakh and flexible tenures ranging between 3 months to 36 months for easy repayments.

Benefits of getting a line of credit with the INDIE app

1. Flexibility: The hallmark of a line of credit with INDIE is flexibility. You borrow when needed, repay when convenient, and have the freedom to reuse the funds anytime.

2. Interest on what you use: Unlike a traditional loan where interest accrues on the entire amount borrowed, with a credit line, you only pay interest on the amount you have utilised.

3. Emergency fund substitute: It can serve as a ready-made emergency fund. Instead of tying up a lump sum in a savings account, get a line of credit to help you meet unexpected expenses.

4. Lower interest rates: INDIE’s line of credit offers lower interest rates compared to most credit cards. This makes it a cost-effective option for those looking to manage their finances more efficiently.

5. Improves credit score: Responsible use of a line of credit positively impacts your credit score. Timely repayments and effective management of your available credit demonstrate financial responsibility and help improve your credit score.

Who can apply for a line of credit?

A line of credit is suitable for individuals who require periodic access to funds without the constraints of a traditional loan. Entrepreneurs, freelancers, professionals, or anyone who needs urgent funds can benefit from the financial flexibility it provides.

In what cases can a credit line be suitable?

1. Unforeseen medical expenses: Health emergencies can be financially draining. A line of credit can act as a safety net and offer immediate access to funds when health-related expenses arise unexpectedly.

2. Home renovations: When undertaking home improvements, costs can be unpredictable. A line of credit ensures you have funds available for renovations without the need for a large upfront sum.

3. Education expenses: Pursuing education often involves various costs. A line of credit can be a prudent choice to cover tuition fees, books, and other related expenses.

4. Business operations: For business owners, a line of credit can be a lifeline during periods of fluctuating cash flow, helping to cover operational costs seamlessly.


The line of credit stands out as a versatile and powerful option if you are looking for quick funds. The flexibility and ease of fund access it offers through revolving credit can help you resolve most of your daily financial hardships. Getting a line of credit set up through the INDIE mobile banking app can empower you to navigate the unpredictable terrain of expenses with grace.

So, why wait? Get a line of credit through INDIE today and manage your finances effectively with utmost flexibility.

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.