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.
Additional Information and Definitions
Credit Limit
The maximum amount you can borrow from this line of credit. Your balance cannot exceed this limit.
Initial Balance
Your current outstanding balance on the line of credit. Must be less than or equal to your credit limit.
Annual Interest Rate (%)
Yearly cost of borrowing. We convert it to a monthly rate to calculate each month's interest portion.
Base Monthly Payment
The amount you can commit each month. Must be enough to cover interest or you'll never reduce the balance.
Extra Payment
An optional addition to your base monthly payment. Helps pay down the principal faster, reducing total interest.
Manage Your Revolving Debt
Plan out consistent payments or add extra to reduce interest costs.
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Understanding Line of Credit Terms
Key definitions to clarify how revolving credit lines are managed.
Credit Limit:
The maximum borrowing limit. A higher credit limit can tempt more spending, but offers flexibility.
Revolving Balance:
The portion of the limit you've used. You can draw additional amounts or repay repeatedly, up to the limit.
Monthly Payment:
A required payment to reduce the balance. Some lines of credit only require an interest portion, but paying more cuts interest faster.
Extra Payment:
Any amount above the minimum, applied directly to principal. Helps you pay off revolving debt sooner.
5 Little-Known Facts About Lines of Credit
Revolving credit can be a flexible way to borrow, but it comes with hidden nuances. Check these out:
1.Interest Compounds Monthly
Unlike an instalment loan, lines of credit recalculate interest monthly on the current balance. This can fluctuate if you borrow more or pay off a chunk.
2.Teaser Rates Expire
Banks might offer a promo rate for a few months. Once it ends, standard (often higher) interest applies, so plan your paydown accordingly.
3.Draw Period vs. Repayment Period
Some lines have a draw period for borrowing, then a later repayment phase. Make sure you understand when you can still withdraw funds.
4.Over-Limit Fees
If you exceed your credit limit, you may be hit with penalty charges. Keep track of your balance or ask for a limit increase if needed.
5.Periodic Rate Changes
Many lines of credit are variable rate, adjusting with market conditions. Check your statements for unexpected rises in APR.