Line of Credit Calculator
See what a HELOC or personal line of credit costs each day, each month and over its whole life, including the jump when repayment begins.
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A line of credit lets you borrow up to a limit, repay and borrow again, and pay interest only on what you’ve used. Home equity lines of credit (HELOCs) and personal lines of credit work this way. Their payments change over time, low during the draw period and higher once repayment starts. This calculator shows the daily interest, both payments and the total interest cost.
How to use the line of credit calculator
- Enter your credit limit and the amount drawn (your balance).
- Enter the interest rate, usually prime plus a margin.
- Enter the draw period and the repayment period in years.
The results show the interest-only payment during the draw period, the payment in the repayment period, the interest per day, the total interest and the credit still available.
How line of credit interest is calculated
daily interest = balance × annual rate ÷ 365
interest-only payment ≈ balance × annual rate ÷ 12
repayment payment = balance × r ÷ (1 − (1 + r)^−n)r is the monthly rate and n is the number of months in the repayment period. This calculator assumes the balance stays the same during the draw period. Real balances change as you borrow and repay, so each month’s interest follows the actual balance.
Worked example
You have a $50,000 HELOC and have drawn $25,000 at 8.5%, with a 10-year draw period and 20-year repayment period.
- Interest per day: 25,000 × 0.085 ÷ 365 = $5.82.
- Interest-only payment during the draw: $177.08 a month.
- Repayment-period payment: $216.96 a month, 23% higher.
- Total interest over 30 years: $48,319.39, nearly double the amount borrowed, because the balance isn’t reduced for the first 10 years.
You still have $25,000 of credit available during the draw period.
Using a line of credit wisely
- Pay principal during the draw period if you can. It lowers both the interest and the later payment.
- Plan for rate changes. A 2-point rise on $25,000 adds about $42 a month to the interest-only payment.
- Use it for planned, valuable costs such as home improvements, not everyday spending.
- Keep a buffer. Lenders can freeze or reduce a HELOC limit if home values fall.
- Compare with a fixed loan. For a one-off cost with a known amount, a home equity loan or personal loan with a fixed rate can be cheaper and more predictable.
To compare with a fixed-term loan that is interest-only for a set time, use the interest-only loan calculator. To see how much you could borrow in total, use the loan affordability calculator.
Common mistakes
- Budgeting only for the interest-only payment. Plan for the repayment-period payment from the start.
- Ignoring variable rates. Payments can rise even if you don’t borrow more.
- Treating home equity as free money. A HELOC is secured by your home, so missed payments put the home at risk.
- Forgetting fees. Annual fees, early-closure fees and appraisal costs add to the cost.
Frequently asked questions
How is interest calculated on a line of credit?
Interest is charged only on the amount you've drawn, usually daily at the annual rate ÷ 365, and billed monthly. A $25,000 balance at 8.5% accrues about $5.82 a day.
What is the draw period on a HELOC?
It is the time, often 10 years, when you can borrow from the line and usually pay only interest. After it ends, the repayment period begins, and the balance is amortized with principal-and-interest payments, often over 20 years.
Why do HELOC payments rise so much?
During the draw period, you may pay interest only. In the repayment period, you start repaying principal too. On $25,000 at 8.5%, the payment rises from $177.08 to $216.96 a month, and more if rates have risen.
Is a HELOC rate fixed?
Usually not. Most HELOCs have a variable rate tied to the prime rate plus a margin, so payments change when rates move. Some lenders let you lock part of the balance at a fixed rate.