A line of credit is different from a loan in that a loan is a fixed sum of money repaid over a fixed term (period of time), and a line of credit is a revolving account a creditor can borrow against, withdrawing funds up to the maximum amount of the line of credit, and paying-down the line of credit at any time, with the balance fluctuating over time. Thus, a line of credit is more similar to a credit card account, but is usually provided by a local bank based on the debtor’s personal or business relationship with the bank.

In South Dakota, as in other states, a line of credit and a loan are distinct financial products. A loan in South Dakota is a fixed amount of money that is borrowed and must be repaid over a predetermined period, often with interest. This includes personal loans, mortgages, auto loans, and other types of installment loans. On the other hand, a line of credit is a flexible borrowing option where the borrower is approved for a maximum amount and can draw funds up to that limit as needed. The borrower can then repay the borrowed amount over time, often with the flexibility to borrow again up to the limit without a new application process. This is similar to how credit card borrowing works, but lines of credit may offer lower interest rates and are typically issued by banks based on personal or business relationships. South Dakota's state statutes and federal laws regulate both loans and lines of credit, including interest rates, lending practices, and consumer protections. It's important for borrowers to understand the terms and conditions, including repayment obligations and any associated fees, before entering into a line of credit agreement with a South Dakota bank.