Line of Credit

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Definition

Line of Credit is a prearranged amount of money that a company can use at any point. Similar to a loan, the line of credit typically has to be repaid with interest by a given time. However with a line of credit, the company only has to pay interest on the money that they used and does not have to take out funds at one given time but rather can take them out when need be.

An example of a line of credit is a credit card.

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