Dictionary of Accounting Terms: credit line
credit line
specified amount of money available to a borrower from a bank usually for one year. A credit line is a moral, not a contractual, commitment, and no commitment fee is charged. Compensating balances, though, are commonly required-10% of the line plus 10% of amounts borrowed under the line. There are confirmed lines of credit and guidance lines, the former being documented by a letter to the depositor, the latter being an internal limit observed by the bank. Credit lines contrast with revolving credits, which are contractual and involve a commitment fee.
Dictionary of Banking Terms: credit line
credit line
- maximum amount of credit available in an open-end credit arrangement such as a bank credit card, which the lender may change at any time. The line is disclosed in the credit card agreement.
- funds available to a borrower for a specified period, subject to review before renewal, for example, a revolving line of credit.
