What are lines of credit primarily used for?

Lines of credit are primarily utilized as a flexible borrowing option that allows individuals or businesses to access funds as needed, up to a certain limit. This accessibility means that borrowers can withdraw money at any time, in varying amounts, based on their immediate financial requirements. The interest rates associated with lines of credit can fluctuate, making them an adaptable solution for managing cash flow or unexpected expenses.

This flexibility differentiates lines of credit from traditional loans, which typically come with fixed amounts and fixed interest rates. By allowing borrowers to draw just what they need, lines of credit can be particularly beneficial for those needing capital for short-term projects or unforeseen costs without committing to a long-term loan.