Credit Card Vs. Line Of Credit: Difference | Refresh Financial

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Credit Card vs. Line of Credit: What’s The Difference?

Credit Card vs. Line of Credit
Ever asked yourself, credit card vs. line of credit? If so, you're on a great track at understanding these two different credit products.

At face value, these two credit products can be tough to differentiate. They’re both classified as ‘revolving credit’ (which means as your available funds are freed up as you pay back your balance), and you’re also charged interest on the balance you carry.

Let’s take a closer look and unearth the differences between the two.

Interest rates:

Credit cards have much higher interest rates than a line of credit. If you’re in the habit of carrying a balance on a credit product, a line of credit will definitely be more cost effective.

A helpful tip: if you have a line of credit as well as a credit card, try and transfer any debt owing on your card to your line of credit, as this will reduce your interest fees as you pay off your balance.

Easy Transfers:

A line of credit is sort of like having another bank account. You can gain access to it through your bank access card and you can manage it from your online banking platform. You have the freedom to transfer money from your line of credit into your chequing or savings account. Keep in mind, you will be charged interest on any funds that you transfer from your line of credit.


A major benefit of a credit card is the convenience factor. It can be tough to beat the simplicity of a credit card. Eating out? Staying at a hotel? Renting a car? It’s easy to cover these normal travel expenses with plastic.

Cash Advances:

Need a cash advance? A line of credit is much easier and far less costly. Credit cards charge an even higher interest rate on any cash advance, plus there can be additional upfront fees tacked on as well. With low borrowing costs, this is an area where a line of credit can really shine.


One of the perks that a credit card offers are the rewards you can earn through your purchases. Collect points, travel rewards, or even cash back on select cards as you make purchases through your card. These benefits are not available with a line of credit, which is why it makes sense to use your card and then transfer your balance to your line of credit. Reap the rewards of the credit card, but save on interest with the lower costs on a line of credit

Online Purchases:

Online shopping is becoming increasingly popular and credit cards tend to be the easiest way to pay for things through internet retailers. If you’re an avid online shopper, a credit card might be the better choice for you.

As you can see, both types of credit products have their pros and cons, but if used together responsibly, you can truly have the best of both worlds.

Did we miss anything? Let us know in the comments!

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