Meaning of "line of credit"

[Lotos]

English Language Tests, Intermediate level

ESL/EFL Test #232 "Bank Terminology (2)", question 1

Ben and Jen need money to redecorate their home. So, they asked a loan officer if they qualify for a ......... instead of a second-mortgage on their house.

(a) deposit slip
(b) line of credit
(c) debit card
(d) bill

English Language Tests, Intermediate level

ESL/EFL Test #232 "Bank Terminology (2)", answer 1

Ben and Jen need money to redecorate their home. So, they asked a loan officer if they qualify for a line of credit instead of a second-mortgage on their house.

Correct answer: (b) line of credit

Your answer was: incorrect
Ben and Jen need money to redecorate their home. So, they asked a loan officer if they qualify for a debit card instead of a second-mortgage on their house.
_________________________

what is line of credit?

Lotos

[Conchita]

Line of Credit - LOC

An arrangement between a financial institution (usually a bank) and a customer establishing a maximum loan balance that the bank will permit the borrower to maintain.

Notes:
The advantage of a line of credit over a regular loan is that you usually don't pay interest on the part of the line of credit that you don't use.

(TheFreeDictionary)