Manage your revolving credit and calculate monthly costs
Usually 1% to 3% of the outstanding balance.
Results Summary
Total Outstanding Balance:
Remaining Available Credit:
Est. Monthly Interest Cost:
Min. Monthly Payment:
Understanding Your Line of Credit (LOC)
A Line of Credit (LOC) is a flexible, revolving credit arrangement provided by financial institutions. Unlike a traditional loan where you receive a lump sum and pay it back over a fixed term, an LOC allows you to borrow up to a certain limit, repay it, and borrow again as needed.
How Interest is Calculated
Interest on a line of credit is typically calculated on the average daily balance. This means the more frequently you pay down the balance, the less interest you accrue. Most LOCs feature variable interest rates tied to a benchmark like the Prime Rate.
Revolving Credit vs. Installment Loans
Flexibility: You only pay interest on what you actually borrow, not the entire limit.
Repayment: Monthly payments are often flexible, requiring only a small percentage of the balance or interest-only payments.
Reusability: As you pay back the principal, your available credit increases automatically.
Practical Example
Imagine you have a $15,000 credit limit with an 8% APR. If your current balance is $5,000 and you draw an additional $2,000: