Introduction
A line of credit lets you borrow money up to a set limit. You only pay interest on the part you use, not the whole limit. This Line of Credit Calculator shows you what that borrowing really costs.
Type in your credit limit, how much you have drawn, and your interest rate. Pick how often you pay: weekly, bi-weekly, semi-monthly, or monthly. Then choose to make fixed payments that lower your balance, or interest-only payments that keep the balance the same.
The calculator gives you your minimum payment, payoff time, total interest, and total cost of borrowing. It also breaks down your daily interest, shows each step of the math, and builds a full payment schedule.
You can compare your line of credit to a regular loan side by side. A slider lets you test extra payments and see how much interest and time you save. Charts show your balance dropping over time and how payment frequency changes your interest.
Rates on a line of credit can go up. The Rate Impact table shows what happens to your total interest if your rate rises by 1% or 2%. Use this tool before you borrow so there are no surprises later.
How to use our Line of Credit Calculator
Enter your credit limit, how much you have drawn, your interest rate, and how you plan to pay it back. The calculator shows your minimum payment, payoff time, total interest, total cost of borrowing, a full repayment schedule, and how a line of credit compares to a regular loan.
Total Credit Limit: Type the full amount your lender approved you for. You only pay interest on what you use. If you want to see how your balance stacks up against your limit, try the Credit Utilization Calculator.
Amount Currently Drawn: Type how much you have borrowed right now. It must be more than $0 and not more than your limit.
Annual Interest Rate (AIR): Enter your yearly rate as a percent, like 7.5. Most line of credit rates can change over time. Not sure what rate you are really paying? The APR Calculator and the Effective Interest Rate Calculator can help.
Payment Frequency: Pick how often you pay: monthly, semi-monthly, bi-weekly, or weekly. Interest builds daily, so this changes your cost.
Repayment Type: Choose "Fixed Repayment" to pay principal plus interest, or "Interest-Only" to pay just the minimum payment each period.
Fixed Repayment Amount: Enter how much you will pay each period. It must be more than the interest that builds up, or your balance will never drop.
Interest-Only Period: If you chose interest-only, enter how many months you will pay interest before you repay the full principal in one lump sum. See the Balloon Payment Calculator to plan for that final payment.
Optional Monthly Fees / Insurance: Enter any monthly fee your lender charges. Leave it at 0 if you have none.
Avg. Days in Billing Cycle: Enter the number of days in your billing cycle. Most people use 30.42, which is 365 days divided by 12 months.
"What-If" Extra Payment Per Period: Slide this to add extra money to each payment. The tool shows how much interest and time you save. For a full debt plan, pair it with the Debt Payoff Calculator.
Compare with a Traditional Loan: Turn this switch on to see a side-by-side match up with a normal term loan. You can also run the numbers in our Loan Comparison Calculator.
Loan Principal: Enter the loan amount you want to compare. It fills in from your drawn amount, but you can change it.
Loan Annual Interest Rate: Enter the yearly rate on the loan as a percent. Loan rates are often higher than line of credit rates.
Loan Term: Enter how long the loan lasts, then pick months or years.
Loan Payment Frequency: Pick how often you would pay the loan back. The Loan Payment Calculator breaks down a single fixed payment in more detail.
Click Calculate to see your results, charts, and schedule. Click Reset to start over with the default numbers.
What Is a Line of Credit?
A line of credit (LOC) is a pool of money a bank lets you borrow from. You get a credit limit, like $25,000. You can take out as much or as little as you want, up to that limit. You only pay interest on the part you actually take out, not the whole limit. When you pay money back, that amount is free to borrow again. That is why a line of credit is called revolving credit, the same structure used by a credit card (see the Credit Card Interest Calculator) or a HELOC secured by your home.
How Line of Credit Interest Works
Most lines of credit charge daily interest. The bank takes your yearly rate, splits it over 365 days, and charges that small amount on your balance each day. So a smaller balance means less interest, and paying early in the month saves you money.
The math looks like this:
- Daily rate = yearly rate ÷ 365
- Daily interest = balance × daily rate
- Monthly interest = daily interest × days in the billing cycle (about 30.42)
Example: $10,000 drawn at 7.5% costs about $2.05 a day, or close to $62 a month in interest. Our Monthly Interest Calculator and Daily Compound Interest Calculator show the same idea from other angles.
Minimum Payment vs. Fixed Payment
Your minimum payment is usually just the interest (plus any fees). It keeps your account in good standing, but your balance never goes down. This is called interest-only.
A fixed payment is a set dollar amount you pay each period. Part of it covers interest, and the rest cuts down the principal. Your payment must be bigger than the interest that builds up each period, or your balance will never shrink. The Loan Payoff Calculator shows how a steady payment closes out a balance.
Variable Rates: The Big Risk
Most lines of credit use a variable rate. It moves up and down with the lender's prime rate. If rates rise 1% or 2%, your interest cost rises too, and it takes longer to pay off the balance if your payment stays the same. Always check what happens to your budget if rates climb, and keep an eye on your debt-to-income ratio and your monthly budget.
Line of Credit vs. Traditional Loan
- Line of credit: Borrow again and again, flexible payments, rate usually variable, no set end date. Best for uneven costs like home repairs or a business cash gap (see the Business Loan Calculator).
- Traditional loan: One lump sum, fixed payment, fixed rate, set end date. Best when you know the exact amount you need and want a clear payoff date. Run it through the Loan Calculator or the Personal Loan Calculator.
A line of credit often has a lower rate, but because there is no deadline, many people carry the balance for years and pay more interest in the end. A loan forces you to finish. If you are using a line of credit to clear other debts, compare it with the Debt Consolidation Calculator and the Balance Transfer Calculator.
Ways to Pay Less Interest
- Pay more than the minimum. Every extra dollar goes straight to principal. The Debt Avalanche Calculator and Debt Snowball Calculator help you decide which balance to hit first.
- Pay more often. Weekly or bi-weekly payments cut the balance sooner, so less daily interest builds up.
- Only draw what you truly need.
- Count monthly fees or insurance as part of the real cost.
- Keep a cash cushion so you do not have to draw again; the Emergency Fund Calculator shows how much to set aside.
Words to Know
- Credit limit: The most you are allowed to borrow.
- Draw: Money you take out of the line.
- Principal: The amount you borrowed, before interest. See the Loan Interest Calculator.
- Total cost of borrowing: Principal + interest + fees.
- Effective annual cost: The true yearly cost once interest, fees, and payment timing are all counted. Related to APY and the internal rate of return.
- Balloon payment: One large payment of the full principal at the end of an interest-only period.