What's the difference between LOC and credit card?
Both are revolving credit. Lines of credit typically have lower rates, higher limits, and are accessed via transfers rather than cards. They're designed for larger, less frequent borrowing.
Debt Management
Line of Credit Payment Calculator
Estimate how many months you'll need to clear your revolving credit balance and how much interest you'll pay.
Manage Your Revolving Debt
Plan out consistent payments or add extra to reduce interest costs.
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What this calculator does
A line of credit (LOC) is a flexible borrowing arrangement allowing access to money up to a set limit. Unlike installment loans, lines of credit are revolving—you borrow, repay, and borrow again. This calculator shows how your payments reduce the balance over time.
How it works
Each month, interest accrues on your outstanding balance. The calculator divides yearly rate by 12 for monthly rate, multiplies by balance for interest. Your payment covers interest with remainder reducing principal. Extra payments accelerate payoff significantly.
Formula
Monthly Interest = Balance × (Annual Rate ÷ 12 ÷ 100). Principal Payment = Monthly Payment + Extra − Interest. New Balance = Previous Balance − Principal. Total Interest = Sum of all monthly interest charges.
Tips for using this calculator
- Pay more than the minimum to save significantly on interest
- Avoid borrowing additional funds while paying down your balance
- Compare your LOC rate to credit card rates
- Set up automatic payments above minimum
- Monitor available credit as you pay down
Frequently asked questions
What if my payment doesn't cover interest?
If your payment is less than monthly interest, your balance grows—you'll owe more next month. Always ensure payments exceed the interest-only amount.
Can I redraw after paying down?
Yes, lines of credit are revolving. As you repay, that amount becomes available to borrow again. This flexibility requires discipline to avoid reaccumulating debt.