The type of credit you choose will depend on what you need the money for and how much you’re looking for. If you’re looking for a large sum you can’t repay immediately, a personal loan is a good option.
If you’re looking for a more flexible way to borrow money, then a line of credit is the way to go. That said, you do have to do some research and find the right line of credit for you. There are plenty of great options out there—some with better interest rates than others.
Lines of Credit and How They Work
Lines of credit are a great way to access funds flexibly. The easiest way to describe a line of credit is that it’s almost like a combination of a personal loan and a credit card. It’s a form of revolving credit you can access as long as you have available room. You have access to potentially lower interest rates, as you would with a personal loan, but you can use the line of credit repeatedly.
With lines of credit, using only 30% to 35% of your credit limit is ideal. While you can use more, doing so can negatively impact your credit score. The lower you’re able to keep the balance, the better off you are.
What Are the Minimum Payments on Lines of Credit?
One upside of a line of credit is that the minimum payments are extremely low and often consist solely of interest. Because of that, though, you aren’t actually paying down the balance at all. You are, however, able to make lump-sum principal payments whenever you like, directly from your bank account. That said, the higher your balance, the more your credit score can suffer.
To figure out how much you owe, you should be receiving an updated balance statement every month. You should also be able to check the balance through your online banking platform.
Different Kinds of Lines of Credit
Essentially, there are three different types of lines of credit: Secured Lines of Credit, Unsecured Lines of Credit and Student Lines of Credit.
Secured LOCs
Secured lines of credit are loans backed by collateral, such as a car or a house. This means that if you default on the line-of-credit payments, your asset can be seized. The most common example of this is a HELOC, or Home Equity Line of Credit. This is when you borrow against the equity in your home as a line of credit. These forms of lines of credit have lower interest rates. However, they are riskier because an asset is attached. That said, because there is an asset attached, they’re the easiest lines of credit to get approved for.
Unsecured LOCs
Unsecured lines of credit have slightly higher interest rates, but you don’t risk losing an asset if you default on the payments. That said, they are harder to get, and you do need to have a decent credit score to get approval, especially if you’re looking for a large sum of money.
Student LOCs
Student lines of credit have lower interest rates than a traditional line of credit. They’re meant for students taking post-secondary education to help with tuition and other related expenses. With these types of lines of credit, you’re only required to pay interest on the outstanding balance until you’ve completed school. Once you’ve completed school, there’s a 6-12-month grace period before you need to start paying back the principal.
What Are the Interest Rates on Lines of Credit in Canada?
After a series of cuts through 2025, the Bank of Canada raised its policy rate in October 2026, bringing the prime rate up to 4.70%. The average rate sits between 8% and 10%. Those with secured personal lines of credit can get lower rates of 6%-7%, while unsecured lines are usually closer to 10%. Since most line-of-credit rates are variable, they will move up or down with any future changes to the prime rate.
Best Bank Line of Credit 2026
If you’ve decided to get a line of credit, you don’t have to get it with your primary financial institution unless it’s the best rate. There are plenty of other financial institutions that offer lines of credit with great rates. Here are some of Canada’s major banks and their line of credit options.
Tangerine
Tangerine is an online financial institution that offers some great rates on lines of credit. Like other lines of credit, interest rates are variable, so it’s difficult to determine the exact rate over the term. That said, Tangerine’s prime rate is 4.70%, and their unsecured line of credit is priced at Tangerine Prime plus an adjustment factor based on your credit profile. Their HELOC rate is tied to the prime rate so that it will fluctuate.
As a bonus, there are no annual fees with Tangerine accounts, so all you pay is the interest and the principal. Because Tangerine is strictly online, you don’t have to go into a branch to get a line of credit. You can apply online and start using the funds as soon as your application is approved. They offer flexible repayment options and 24/7 access to the funds.
Royal Bank of Canada
RBC is another financial institution that offers competitive rates on lines of credit. Some key features that they offer with their Royal Credit Line are:
- No annual fees
- Low interest rates
- Flexible repayment options
- The ability to close your account and reduce limits online
- Credit alerts when your available credit falls below $100
- Loan Insurance: Life, Disability or Critical Illness
RBC also offers secured LOCs. With their secured Home Equity LOCs, the minimum available credit limit is $5,000, with maximum amounts up to 65% of your home’s value minus what is still owed. The minimum limit on unsecured LOCs is also $5,000. The rate you’re approved for depends on your financial situation, credit score and the current prime rate, which is 4.70%.
Their website also has a loan calculator. You just enter the total amount and the monthly interest rate, and you’ll get an estimated monthly payment.
TD Canada Trust
TD Canada Trust offers a variety of LOC options, including:
- Personal lines of credit
- Student lines of credit
- Investment-secured lines of credit
- TD Home Equity Flexline
Which LOC you get approved for will depend on your financial situation, credit score, and the reason you would like an LOC. The current prime rate at TD is 4.70%, so each LOC’s rate will fluctuate with it. However, TD also offers a fixed-rate option you can choose instead.
You can apply online, in person or over the phone with TD. The approval amounts are based on your individual situation and range from $5,000 to $50,000.
You can access your TD LOC through the app or online banking. However, your current interest rate will only show when you use online banking. You can also set up your LOC to withdraw funds directly from your TD access card.
Scotiabank
While Scotiabank LOCs are similar to those at other banks or credit unions, one unique feature they offer is a Visa access card for your line of credit. This allows you to withdraw money without transferring funds. Other features include:
- No annual fees
- Credit limits from $5,000 to $75,000
- Flexible repayment options
- Access to the app
- Optional line of credit insurance and critical illness insurance
- 25% off rental cars at some Avis or Budget locations with the access card
To apply for a personal line of credit, you’ll need a few different documents. You’ll need at least one of the following:
- Passport
- Driver’s Licence
- Valid government-issued ID
You’re also going to need a letter of employment and pay stubs. If you’re self-employed, you’ll need to provide proof, such as a notice of assessment or a current assessment on your My Account.
The different lines of credit that Scotiabank offers are:
- ScotiaLine Personal Line of Credit
- ScotiaLine Personal Line of Credit (Real Estate Secured)
- ScotiaLine Personal Line of Credit for Students
- Scotia RSP Catch-Up Line of Credit
The current prime rate on Scotiabank lines of credit is 4.70%.
Bank of Montreal
BMO also offers some good lines of credit at great rates. There are a few to choose from, and you can get a preferred rate when you secure an asset for your LOC. Here are the different LOC options available.
- Personal LOC:
- Minimum $2,000 credit limit
- Minimum monthly payments of $50 or 2% of the balance (whichever is greater)
- Apply online if you bank with BMO
- Homeowner’s LOC
- Minimum $5,000 credit limit
- Interest-only payments required
- Online access with a BMO chequing account
- Homeowner ReadiLine
- Minimum $5,000 credit limit
- Access up to 80% of your home’s value
- Access to more as you pay your mortgage
If you choose to apply online, you can get approved for up to $25,000 for a personal line of credit. For more money or a different LOC, you’ll need to book an appointment and visit the branch.
All BMO lines of credit have variable interest rates. The interest is calculated daily and posted monthly as your minimum payment. The current prime rate for BMO LOCs is 4.70%. Your interest rate will depend on your credit score, credit history, financial situation, and the type of line of credit you get.
Canadian Imperial Bank of Commerce
CIBC offers two different types of lines of credit. These are:
- CIBC Personal Line of Credit
- CIBC Home Power Plan Line of Credit
Both of these have variable interest rates tied to the CIBC prime rate, currently 4.70%. They both have open-ended terms, but the minimum credit limits differ. The minimum on the personal line of credit is $5,000, and the home power plan has a minimum credit limit of $10,000. The main difference between these two is that security is required for the home power plan, while it’s optional for the personal line of credit.
You can apply with CIBC online, in person, or over the phone.
Mogo
With Mogo, you can get a Mogo line of credit with a limit of up to $5,000. However, interest rates are much higher than at the big banks, at roughly 35%. Plus, to get approved, you generally need a minimum credit score of 600 and a minimum annual income of $35,000.
Credit Union Lines of Credit 2026
Credit unions in Canada offer a variety of credit products similar to those of banks. Let’s see how the lines of credit compare.
Meridian
One of the many credit products Meridian Credit Union offers is a line of credit. They also have a few different options, including:
- Personal Lines of Credit
- Home Equity Lines of Credit
Their personal lines of credit offer flexible payment terms and variable interest rates based on the current prime rate. Meridian HELOCs offer variable rates tied to the prime and are available as long as you own your home and have equity. They also offer Meridian Flex Line Mortgages that combine your mortgage and line of credit into a single product.
FirstOntario
FirstOntario Credit Union offers three different kinds of lines of credit:
- Personal Lines of Credit
- Student Lines of Credit
- Home Equity Lines of Credit
With their personal lines of credit, you have the choice between secured and unsecured loans. Interest rates on secured lines start at 6.69%, and on unsecured lines at 7.49%. Student lines of credit start at just 6.00%, and homeowners who use their home equity as security can access their lowest rates.
Vancity
Vancity Credit Union also offers some line-of-credit options. The rate you’ll get depends on your total credit limit and your credit score. If you’re looking for an LOC that offers over $5,000, then you’re looking at a rate of Vancity Prime plus Increment. If you’re looking for a line of credit under $5,000, then the interest rate is 17.75%.
What Are Some Other Places to Get a Line of Credit in Canada?
The places above aren’t your only options for lines of credit. Some other banks in Canada that also offer competitive rates include:
- Simplii Financial
- National Bank
- Desjardins
- ATB Financial
- Coast Capital Savings
- Servus Credit Union
You can even get an EQ Bank line of credit completely online. Keep in mind that secured lines such as HELOCs require you to pass the mortgage stress test, while unsecured lines are based mainly on your credit and debt service ratios.
Credit Score Needed to Get a Line of Credit
Getting a line of credit is more difficult than getting a credit card or even a personal loan. Why is this? Well, this is mainly because lines of credit aren’t used one time. You can continue using them for as long as you like. Because they offer ongoing access to funds at lower rates than credit cards, lenders are more selective about who qualifies.
A good credit score is recommended to get a line of credit. Some credit lenders will give you an LOC with scores around 660. However, the ideal score for approval is 720 or higher. Some private lenders will give lines of credit to those with bad credit, but those who do have higher rates.
Will Applying Hurt Your Credit Score?
Yes, just like with any other type of credit, applying can cause a small drop in your score. This is because the lender conducts a hard credit inquiry when you submit your application, which can lower your score by 5 to 15 points. That said, this is simple to recover from by making your payments on time every month.
If you get preapproval when you apply, it uses a soft credit inquiry instead of a hard one. This differs from overdraft protection, which is typically available in smaller amounts and can usually be approved with a soft inquiry.
Amounts You Could Get With a Line of Credit
Credit limits on lines of credit in Canada vary by financial institution. The minimum credit limit for most lines of credit is $5,000, but they can go as low as $1,000. The maximum credit limit is usually around $50,000, but some financial institutions will go up to $100,000 or higher.
Difference Between Lines of Credit and Credit Cards
Lines of credit and credit cards are similar in that they are both forms of revolving credit and have preset credit limits. That said, there are quite a few differences between them. The first is interest rates. Most lines of credit have variable interest rates, unlike loans, which usually have fixed interest rates. The line-of-credit rates are also much lower, averaging around 6% to 10%. Credit card interest rates in Canada are around 19.99%.
With both credit cards and LOCs, the interest is calculated daily and added to your statement every month. Because LOC interest rates are lower, monthly payments are lower, and they tend to be easier to pay off. Many people actually use lines of credit to pay off their credit card debt.
Another perk of lines of credit is that they have higher credit limits than credit cards. While there are higher-limit credit cards, they often have a lot of restrictions and can be more difficult to get approval for since they’re mostly based on your monthly household income.
Not all lines of credit are attached to debit or credit cards. You have to transfer money from the credit account to your chequing account before you can use it. You can also get cheques for your LOC account. Credit cards are more accessible and easier to use.
What Can Lines of Credit Be Used For?
Most financial institutions have no restrictions on how their lines of credit can be used. That said, some of the most popular reasons people choose to get an LOC are:
- Renovations
- Rainy Day Funds
- Vacations
- Vehicle purchases
- Furniture
- Ongoing projects
- Tuition
- Debt consolidation
No matter what you use the line of credit for, though, the principal stays the same. Your minimum payment is the interest, and you can make principal payments whenever you like. You don’t even have to transfer the funds to your account to use it; you can also write cheques to take funds directly from the line of credit.
Can You Get a Joint Line of Credit?
In Canada, you can get a joint line of credit with a spouse, partner or family member. To get a combined loan plan, you need to fulfill the co-signer requirements. Both line-of-credit holders are responsible for the amount borrowed and have equal access to the funds. It’s listed on both credit reports, and any late payments can negatively affect both credit scores.
What is the Cost of Interest on a $10,000 Line of Credit?
The interest charged on a $10,000 line of credit depends on the interest rate and the amount used. For unsecured personal lines of credit, the interest rates range from prime + 3% to prime + 10%. The interest rates on secured lines of credit range from prime + 0.5% to prime + 2%.
For example, if you have a $10,000 balance at an 8% rate and maintain that balance for the year, the cost of borrowing for the year is $800. This works out to $66.67 per month. Since you pay interest only on lines of credit monthly, this will be your minimum monthly payment. If you make both principal and interest payments, your balance and future interest costs will go down each month.
Are Newcomers Able to Get a Line of Credit in Canada?
When you’re new to Canada, getting a line of credit without a previous Canadian credit history can be difficult. In fact, most large banks in Canada only offer chequing accounts, savings accounts, and credit cards to newcomers. Only a few banks will offer a line of credit. These are normally regional options, while others will take into account your foreign credit history.
Getting Approved for a Line of Credit Without a Credit Check
To get a line of credit, you will likely need a credit check. Even if it’s just a soft credit check, most lenders want to look at your credit profile in some way before they allow you to borrow funds.
Instead of looking at unsecured options, if you’re looking for a line of credit, you can look at ones that require collateral. This can be used instead of high credit scores with the credit bureaus. You can also go with payday loans; however, they are a form of high-interest debt with lower borrowing limits.
Should You Get Insurance on Your Line of Credit?
When you get a line of credit, you can get creditor/loan protection insurance that will pay off your balance or cover your payments if you die, become disabled, or suffer from a critical illness. Some insurances may even cover you if you involuntarily lose your job.
If this insurance is used, the payout will go directly to your lender. Unlike other insurances, it doesn’t go to your family as cash. Plus, as you pay down your balance, your insurance payout drops accordingly. It only takes a few seconds to enroll without a medical exam.
Before you sign up, though, there are some things you need to consider. The first is that it’s not true life insurance. While it will pay off your balances, there is no cash value. They may also ask a lot of health questions when you need to file a claim. This can result in your claim being denied. They are also known for having a higher cost-to-benefit ratio than standard life insurance.
Increasing the Limit on Your Line of Credit
If you have unexpected expenses and are looking to increase the limit on your personal line of credit, you’ll need to request an adjustment directly through your financial institution. This allows them to access your current financial profile as part of the approval requirements.
You’ll need to show proof that your annual income is high enough to support a large limit, and you have a credit score that shows you’re able to make on-time payments. Your existing line of credit and bank accounts must also be in good standing.
Are You Able to Have More Than One Line of Credit?
There’s no legal limit on how many lines of credit you’re able to have. Each application is reviewed individually, not based on the number of lines of credit you have. Since there are many different types of lines of credit, such as those that use assets as collateral, you don’t have to pick just one.
Overdraft Protection vs. Lines of Credit
While overdrafts and lines of credit are similar, they do have some key differences. Here’s a look at how each of them works differently.
Overdraft Protection
This type of loan is intended to cover short-term cash gaps on your account. These are typically amounts of $1,000 or lower and are built directly into your chequing account. They generally have higher interest rates and charge additional fees, such as flat-use and pay-per-use fees. Anything you use is automatically paid off when you deposit funds into your chequing account.
Lines of Credit
Lines of credit are intended for larger purchases, emergencies, student loans, and even debt consolidation. They range from $1,000 to upwards of $50,000. They aren’t linked directly to your chequing account and operate as a separate credit account. Interest rates are also much lower because they’re the lender’s prime rate plus a designated premium.
Business vs. Personal Lines of Credit
There are two main types of lines of credit: business and personal. While they both have a lot of similarities, including that they both offer competitive interest rates, the rate you get is based on your income stability, credit score, market conditions, and the prime lending rate.
Business lines of credit are registered through your business and help to build a commercial credit profile for your business. They often allow higher limits tied to your business’s income, and the interest is tax-deductible because it is a business expense.
Personal lines of credit are tied to you personally and can be reported to both Equifax and TransUnion. They are an option many people choose instead of refinancing their mortgage. They’re fast to set up if you use your main banking institution, and can either be tied to your personal income or home equity. Since the interest isn’t considered to be a business expense, it isn’t tax-deductible.
Promotional Rates for Lines of Credit in Canada
The Big 6 banks in Canada generally don’t publish their promotional interest rates. You can only get these rates by applying. However, Tangerine does publish a promotional interest rate. Currently, you can get a rate of 2.99% for the first 3 months.
Unlike non-revolving credit lines, there’s no fixed payment or payment schedule if you don’t use it. Keep in mind that interest is charged daily from the day you withdraw funds, so paying the balance down quickly is the best way to keep interest costs low. If you have amounts on the line of credit, after the promotional period is up, you will be charged the regular interest rate on your total balance.
Common Mistakes to Avoid When It Comes to Lines of Credit
With lines of credit, there are a few things that people commonly do that can increase your debt load. Some of these mistakes include:
- Borrowing up to your maximum amount just because it’s available
- Paying only your minimum payments, which cover the interest and not the principal
- Using short-term credit for large long-term purchases
- Ignoring the fine print
- Letting your credit utilization spike, reducing your credit score
- Using them for debt consolidation without cutting back on your spending
- Closing the account impulsively, which reduces the length of your credit history
When Shouldn’t You Choose a Line of Credit?
When you’re looking at different debt options, you have a lot of choices, including fixed and variable rates, non-revolving, revolving, secured and unsecured. Given the many options, here are some instances when a line of credit may not be the best choice.
- You’re only making interest payments long-term
- Interest rates are increasing
- You’re using the funds for everyday spending
- You don’t have a clear repayment plan for large projects
How to Check Your Credit Score
If you’re looking to check your credit score in Canada, there are simple ways that you can do so online. You can easily check your Equifax score for free with Borrowell, and your TransUnion Score for free with ClearScore.
