Interest Rates

• One significant con to lines of credit is that unlike loans, they typically have variable interest rates which could prove to be financially devastating if interest rates shoot up.
  
  

Flexibility

• A significant pro to opening a line of credit versus a loan is that a line affords you much more flexibility since you are free to use as little or as much as you need. You only pay interest on the amount used.
  
  

Tax Deductions

• The interest on a home equity line may be tax deductible.
  
  

Constant Funds

• Lines of credit may be open significantly longer than a loan. This means that you may have access to extra funds for a much longer time without ever having to reapply.
  
  

Potential to Rack up More Debt

• A credit line leaves much more room for you to rack up extra debt. With a loan, you determine exactly how much you need up front, which leaves zero room for impulse buys. With a line of credit, however, you may be tempted to max it out.