A line of credit is similar to the agreement under which issuers of bank credit cards, such asMastercard and Visa, extend approved credit to cardholders.

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A line of credit and a credit card both involve an agreement in which a lender extends approved credit to a borrower, with the borrower only borrowing and paying interest on the amount they actually use. The main difference is that a line of credit typically involves a larger credit limit and is not tied to a physical card for making purchases.

A Line of Credit Is Similar to the Agreement Under