Personal Line of Credit

D

The correct answer is C. Revolving line of credit.

A revolving line of credit is a type of loan that provides a borrower with a predetermined credit limit that can be used as needed. The borrower can draw on the line of credit at any time, up to the limit, and then repay the borrowed funds with interest. The borrower can then borrow again, up to the limit, and the process can be repeated as often as necessary as long as the borrower makes payments on time and does not exceed the credit limit.

Revolving lines of credit are often used for personal or business purposes, and they can be secured or unsecured. A secured revolving line of credit may require collateral, such as a home or other property, to ensure repayment of the loan. An unsecured revolving line of credit, on the other hand, does not require collateral, but may have higher interest rates to compensate for the increased risk to the lender.

Some common examples of revolving lines of credit include credit cards and home equity lines of credit (HELOCs). However, it's important to note that not all credit cards are revolving lines of credit, as some may have a fixed credit limit that cannot be increased without applying for a new card or requesting a credit limit increase.

In contrast, an overdraft protection line is a type of credit that is attached to a checking account and is used to cover transactions when there are insufficient funds in the account. It can help prevent overdraft fees and other penalties, but it is not a line of credit that is used as needed.

A home equity line of credit (HELOC) is a type of revolving line of credit that is secured by a borrower's home equity. The borrower can draw on the credit line as needed, up to the limit set by the lender, and then repay the borrowed funds with interest. HELOCs are often used for home renovations or other large expenses.

An unsecured personal credit line is a type of revolving line of credit that is not secured by collateral. It can be used for a variety of personal expenses, such as home repairs or medical bills. However, because it is unsecured, it may have higher interest rates and more stringent credit requirements than a secured line of credit.