Line of Credit Interest Calculator
Estimate interest on revolving line of credit with variable draws.
Lines of credit charge interest only on the amount drawn. Daily interest = Balance × (APR/365). This calculator estimates monthly interest based on average daily balance—useful for planning cash flow when you use a LOC for short-term needs.
Inputs
Results
Monthly interest: $167
Annual interest: $2,000
Insights
Formula
Monthly interest = Balance * (APR/12) Annual = Balance * APR
Input Definitions
What does each input mean?
- Average balance
- Typical amount you have drawn from the LOC. Interest is charged only on the drawn amount.
- APR
- Annual percentage rate. Interest accrues daily: Balance × (APR/365).
Related Calculators
Understanding the True Cost of Drawing on a Credit Line
A line of credit is flexible, but flexibility has a cost. Interest accrues on outstanding balances, and the effective rate on short draws can be much higher than the headline APR suggests when you account for fees and the timing of draws and repayments. This calculator helps you model what a specific draw will cost depending on how long you carry the balance and whether you’re making minimum or accelerated payments.
Use this when you’re deciding whether to use a credit line or take a term loan for a specific purpose, when you want to understand the cost of carrying a revolving balance versus paying it down aggressively, or when you’re evaluating credit line offers from different lenders. The most expensive credit line isn’t always the one with the highest rate.