My other emergency fund is a personal line of credit

I was planning on writing today about saving money in tax-sheltered accounts. I'm still going to write about that but something came up that's much more exciting, and I wanted to share it with you.

Today I was on PenFed's website scheduling our mortgage payment for October. I like to pay it manually because it's a large enough sum of money that I feel I should be taking a little time from my busy day to say goodbye (and to make sure I don't overdraw our checking account). On the sidebar a couple of pre-screened offers caught my eye. Now, I already have a mortgage, an auto loan, and a credit card with PenFed — and a checking account. But I figured I might as well look at the looong list of other products they offer and see if anything looked interesting.

And boy did I ever find an interesting product! They offered me a "personal line of credit", basically a home equity line of credit except that it's unsecured. I was so excited I just had to apply right then and there.

The default amount offered was $15k, so I went ahead and applied for that. Denied! they said. Too many hard inquiries in the past 12 months, accounts not open long enough, too many balances on accounts. "Oh well," I thought, "I guess I'll have to try later." But no! Instead, five minutes later, I applied for $5k, because the worst that could happen is they turn me down again. The response was that my application was "under review", and just this evening I found I was approved.

I love lines of credit. I love the idea of some amount of money I can tap if I need it, and that I don't have to pay for when I don't. I love the feeling of more possibilities, of more security, and like I'm being trusted with something valuable.

I don't have a personal emergency fund, so that's what my line of credit is going to be. Just in case any big expense comes up I've got another $5k I can tap in a hurry. Most likely I'll never use it. Every time I buy something big I'll consider paying for it with my line of credit — and then I'll say "No, not worth it". I've neglected to tell you the interest rate: 6% above the prime rate, which makes it somewhere around 9% (I can't find the exact number on the website for some reason). 9% is a high interest rate, and that's why I'm using my personal line of credit for emergencies only.

In the medium term it should help increase my credit score as well. I'm not sure why I'm so interested in increasing my credit score since I've already got all the credit I need. One reason could be I keep telling myself I'm going to be looking at buying a rental property in two to five years from now. And I tend to wear such things as badges of pride.

Last, I want to talk about how awesome credit unions are. I cannot stress enough how happy I've been with PenFed. They go out of their way every day to help me out. If you're not with a credit union, #1 priority in the banking area of your life should be finding a credit union you can join. It will save you money, and more importantly it will offer you a much nicer experience than the traditional Too Big To Fail banks offer.

What do you guys think? If you had access to a personal line of credit, would you want one?