The Credit Card
This is the line of credit you most likely have sitting in your wallet right now. While the Credit Card is probably the worst line of credit on this list, it’s not nearly as bad as all the financial pundits would have you believe. The key factor is viewing this as a tool. Typically, this will have a very large interest rate, and very low credit limit, but is fairly easy to get. Traditional Velocity Banking would only use the credit cards to get ourselves in position for a better line of credit. However, some individuals have linked credit cards to a checking account as an overdraft protection that allows them to write checks. I have not personally done this, and do not know the specific details, but they seem to have experienced success with this method. There are also some individuals who take advantage of the 0% interest promotional rates that some cards offer to avoid interest while their cash flow attacks the principle. I think that this can be beneficial, but only if used as a tool.
The Unsecured Line Of Credit
This is a line of credit that is not collateralized. They come in many shapes and sizes. These will typically have a better interest rate than the credit cards, and much more favorable terms. On the individuals side, the most common product is the personal line of credit or PLOC. Unfortunately, these are normally only offered to those with excellent credit and financial standing. On the business side it will typically be a business line of credit and will often require a personal guarantee.
The Secured Line Of Credit
This line of credit type is collateralized by some asset. The asset can be cash, real property or something else. These will generally have the lowest interest rates, and good terms and the collateralization of the asset provides safety for the bank. Depending on the collateral used, the credit limits can be significantly higher than unsecured lines. This is normally the best tool to use for Velocity Banking.