A line of credit, in layman’s language, is a flexible loan arrangement that allows individuals or businesses to borrow funds up to a pre-set limit. Unlike traditional loans, the borrower can withdraw money as needed, only paying interest on the amount used. This financial tool is often used for ongoing expenses or emergencies, providing ready access to funds. Once repaid, the line of credit becomes available for borrowing again. Banks, credit unions, and other financial institutions offer lines of credit, making them a convenient choice for managing short-term financial needs.