Hacker News Reader

Comment by mynegation | Hacker News Reader

About line of credit: she is Canadian, and in Canada line of credit is a revolving debt instrument pretty much like credit card, but with lower rate and no card attached to it, so it is less convenient to pay from it. This is designed for medium-ticket one-off purchases, like say TV or washing machine.

View on HN

Wow, I had no idea that was just a Canadian thing. What do Americans do?

Business with significant capital get loads secured against that capital. Smaller or low-overhead businesses get loans personally guaranteed by the company officers (often against their personal assets) Or they get by with corporate credit cards (which they used to hand out like candy at the doctor's office) and work out separate payment terms with the vendor for any bigger-ticket items.

Those corporate credit cards are still pretty easy for an individual to get because they don't fall under the same bankruptcy laws as personal cards.

Bank loans are all but unobtainable by many (most?) fledgling entrpreneurs. Credit cards fill the gap.

If you have a good enough credit score, one stategy is to continually try to transfer your balance to new cards with low (0% if you're lucky) introductory rates, while paying the minimum monthly requirement.

You can get a line of credit in america too. Especially if you have a house, those are called "Home equity lines of credit" - very common.

The work like checking accounts in reverse, you write a check off of the account to pay for things (or do a bank transfer), and you send them money to pay it down.

You can also get unsecured lines of credit but those are harder to find.

Europeans do the same, btw. It's very uncommon to have a credit card that is not attached to a bank account in Europe (Netherlands, Germany).

It isn't just Canadian. The French do it that way too. Interestingly, you can also have a credit card without having a line of credit associated with it, at least in France, I don't know if it's the same in Canada... I personally have an Amex and a Visa card, both linked to the same bank account, which has no line of credit.

I don't know if this is uncommon, but on both business checking accounts (in the US) I've set up, I asked for and got attached lines of credit. Basically, it lets you bounce above and below a zero balance in case your cash flow is tight. You could certainly use it to get yourself into trouble, but I didn't and it was very useful.

Reply on news.ycombinator.com