December 6, 2023


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What Is a Personal Line of Credit?

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Wells Fargo started informing consumers this week they would be eliminating their personal line of credit product. In the letters reviewed by CNBC, the bank stated they are shifting their focus to credit cards and personal loans.

They also stated that for consumers who currently have a personal line of credit open with the bank, that their credit score may be impacted when the product is ended. This short notice has displeased consumers and bank industry critics alike.

But what exactly is a personal line of credit? Select walks you through what you need to know about the product, including the pros and cons, and what to be aware of when you are applying so you can choose the one that best aligns with your needs.

What is a personal line of credit?

A personal line of credit, sometimes abbreviated as PLOC, is a set amount of credit made available to you by a financial institution over a set period of time. Many consumers use a personal line of credit to consolidate debt, expand their business, pay medical bills, refinance existing debt, renovate their home and more.

A personal line of credit is somewhat of a crossover between a credit card and personal loan. However, there are a few distinguishing features:

Pros and cons of a personal line of credit

There are several use cases where a personal line of credit makes sense, while in other scenarios it may not. As with any personal finance decision, it is advantageous to explore all of your options.


A personal line of credit is an excellent way to access capital. However, each lender may restrict what you are able to use your funds for, so be sure to check into the terms from the lender. Here are a few pros of using a personal line of credit:


A personal line of credit is a different type of lending product with several unique benefits, but there are also a few drawbacks to keep in mind:

  • The risk of unsecured loans: A personal line of credit is considered an unsecured loan because there is no collateral taken by the lender. This typically results in higher interest rates since the financial institution assumes all of the risk.
  • High credit score required: Because the loan is unsecured and in some cases, the line of credit can be hundreds of thousands of dollars, a credit score of over 700 is typically required.

Alternatives to a personal line of credit

How to qualify for a personal line of credit

Banks that offer personal lines of credit

While Wells Fargo has eliminated the personal line of credit product, there are an ample amount of banks still offering the same. Each institution offers different lending amounts, terms and fees, so be sure to compare between institutions to find the best one for you.

Bottom line

A personal line of credit can be used as a strategic tool to manage debt, grow a business or renovate a home. While Wells Fargo has eliminated the product from their offerings, there are several other banks that still offer it. And with the right interest rate and terms, a personal line of credit could be a helpful resource for you in your financial endeavors.

Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.