Question

How is a line of credit similar to a credit card?

Answer 1

The right answer for the question that is being asked and shown above is that: "a. Interest is charged only on the amount you actually borrow."  a line of credit similar to a credit card is that a. Interest is charged only on the amount you actually borrow.

Answer 2

Answer: a. Interest is charged only on the amount you actually borrow.

Explanation:

A line of credit (LOC) is known to be a certain amount of money agreed upon by a financial institution which enables an individual to borrow money. The borrower can only borrow the money up to the maximum amount agreed upon.

Credit card is a card issued by a financial institution to a card holder in order to pay for the goods and services purchased. The money is been paid back by the card holder with the interest rate and other charges at the stipulated time agreed upon.

Interest rate is the amount of money a lender or financial institution receives on the money borrowed to a borrower. Hence, interest is charged only on the amount a card holder borrows on a line of credit or credit card account.