Line of Credit

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Checking Line of Credit

One service that most banks and credit unions offer that you should take advantage of is a checking line of credit. A checking line of credit is simply a line of credit connected to your checking account.

You should take advantage of this service because a checking line of credit will ensure that your checks are paid even you don’t have enough money in your account to cover them. This can help you avoid having your account overdrawn and overdraft fees.

Your bank may call this service overdraft protection and may require you to get a credit card to get it. You should get a checking line of credit because it can save you hundreds of dollars, keep your checking account open and protect your credit rating.

Avoid Overdraft Fees

The best thing about a checking line of credit is that it helps you avoid overdraft fees. Most banks will charge an overdraft fee whenever there isn’t enough money in an account to cover a check.

Sometimes the banks will pay the check and sometimes the check will bounce. Either way the bank will hit the depositor with a fee that can be up to $100. Several of these fees can quickly empty a checking account.

A checking line of credit will pay the check with a line of credit. Interest will be charged on the credit but it will almost always be less than the overdraft fees. This can save a depositor quite a bit of money and prevent overdraft fees from cleaning out a checking account. It also gives the customer the piece of mind that checks will be covered.

Other Benefits of a Checking Line of Credit

The biggest benefit of a checking line of credit for individuals and small business is that it can keep your account open. If you go through a period when you don’t have the money to cover the checks in your account a checking line of credit can keep the account open. This means you don’t have the hassle of trying to reopen a closed account or opening a new account.

It can also protect your credit rating because banks will report overdrawn accounts and closed accounts to credit bureaus. This can destroy your credit rating and make it next to impossible to borrow money or open checking accounts in the future.

A checking line of business provides the advantage of a line of credit that business owners can access by simply writing a check or using their check card. This could enable businesses to cover day to day expenses when money is tight. It can also help businesses and individuals survive emergency situations.

How to Get a Checking Line of Credit

The way to get a checking line of credit is to check with your bank or credit union. The institution’s website should be able to tell you if such a product is available and what it will cost. It maybe called overdraft protection or be a credit card linked to the bank account. You can also ask the employees at your bank if this product is available.

If your bank doesn’t offer a checking line of credit, find a new bank. There are many banks out there and one of them will offer a checking line of credit.

 If the number of banks in your community is limited you can go online. There are many online banks and most of them offer checking lines of credit.