Line of Credit Calculator
Calculate payments, interest costs, and payoff strategies for personal lines of credit, HELOCs, and business credit lines.
Line of Credit Type
Credit Details
Interest Rate
Effective rate: 12.50%
Payment Options
Leave blank to use minimum payment
Payment Analysis
Minimum Payment
Interest: $104
Payoff Time
1 months
Total Interest
With minimum payments
Balance vs Interest
How it works
A line of credit is revolving: you draw what you need up to a limit and pay interest only on the outstanding balance, not the whole line. The calculator shows the interest cost and how long a balance takes to clear at a given payment.
Interest on the drawn balance
Monthly interest = Balance · (APR ÷ 12) Principal reduced = Payment − interest
- Balance
- amount currently drawn
- APR
- annual rate (often variable)
- Payment
- what you pay that month
Worked example
- Balance drawn = $10,000 at 10% APR
- You pay $300/month
- First month's interest = 10,000 × (0.10 ÷ 12) ≈ $83
- Principal reduced = 300 − 83 = $217
Paying $300/month, it clears in ~3 years; only paying interest, it never does.
Good to know
- Interest accrues only on what you've drawn, so an open but unused line costs nothing in interest.
- Rates are usually variable — payments rise if benchmark rates do.
- Paying only the interest keeps the balance forever; pay above it to make progress.
Related Calculators
Frequently Asked Questions
How is interest calculated on a line of credit?
You pay interest only on what you've actually drawn, not the full credit limit, and it typically accrues daily on the outstanding balance. Most lines carry variable rates quoted as the prime rate plus a margin, so payments change when prime moves.
What's the difference between the draw period and the repayment period?
During the draw period you can borrow, repay, and re-borrow, often with interest-only minimum payments — HELOCs commonly allow 10 years. Afterward the line converts to a repayment period (often 10-20 years) where you must pay principal and interest and can no longer draw.
What is a HELOC and how is it different from a personal line of credit?
A HELOC (home equity line of credit) is secured by your home, which earns a much lower rate but puts the house at risk if you default. Lenders typically let you borrow up to about 80-85% of your home's value minus the mortgage balance. Personal and business lines are usually unsecured with higher rates.
Why are interest-only minimum payments risky?
Paying only interest never reduces the balance, so the debt persists indefinitely and the required payment can jump sharply when the repayment period starts or rates rise. Paying principal during the draw period keeps the eventual payment shock manageable.
When does a line of credit beat a loan or credit card?
A line suits irregular or uncertain expenses — ongoing renovations, business cash flow gaps — because you borrow only what you need, when you need it. A fixed-rate loan is better for a single known amount, and credit cards only make sense for amounts you'll repay within the grace period.