Line of Credit Cost Calculator

Line of credit cost calculator for interest, fees, and payoff impact

A line of credit (LOC) is flexible borrowing: you draw what you need, repay, and potentially draw again. That flexibility is useful, but it makes costs harder to “see” compared to a normal fixed loan. Your cost is not just the APR. It depends on how long your balance stays outstanding, whether your payment actually reduces principal, and which fees your provider charges.

This line of credit cost calculator estimates the total borrowing cost over a chosen number of months. It models a simple monthly cycle: draws increase your balance, interest accrues based on your APR, fees can add to the balance, and then your monthly payment reduces what you owe. The result is a practical summary of total interest, total fees, your ending balance, and whether your payment is keeping up with interest.

Use it for common real-world decisions: checking whether you are stuck in an interest-only trap, estimating the true cost of “just carrying the balance a few months,” comparing two LOC offers with different fees, or seeing how much faster you reduce your balance if you increase the monthly payment slightly. If you do not know all the details, you can leave optional fields blank and the calculator will still produce a usable estimate based on reasonable defaults.

Assumptions and how to use this calculator

• Monthly interest approximation: Interest is estimated using APR ÷ 12 applied to the current balance each month. Daily accrual and varying month lengths can make real statements differ slightly.
• Draw timing: The initial draw happens at the start, and any “additional monthly draw” is applied at the start of each month. If your borrowing pattern is different, treat this as an estimate.
• Fees treatment: Annual and draw fees are assumed to be charged and added to the balance (which can then also accrue interest) unless you effectively pay them separately.
• Payments timing: The monthly payment is applied after interest and fees for the month are added. If you pay more frequently or mid-month, your real cost can be lower.
• No rate changes: The APR is treated as constant. If your LOC is variable-rate, use an average expected APR and re-check when rates change.

Common questions

Is APR the same as the interest I will pay?

No. APR is the rate, not the total cost. The total interest you pay depends on the balance over time. If you keep a high balance for longer, or your payment is too small to reduce principal, total interest rises quickly. Fees can also add meaningful cost, especially for smaller or short-term balances.

What if my monthly payment is less than the interest?

Then you are not paying down the debt. In many LOC setups, unpaid interest is added to the balance (capitalized), so the balance grows even if you keep paying. This calculator flags that situation and shows how the ending balance can increase over time despite payments.

How do I use the credit limit field?

Credit limit is optional. If you enter it, the calculator checks whether your draws exceed the limit and can warn you. It also helps you sanity-check utilization. Many lenders change terms or pricing at very high utilization, so treat this as a practical guardrail.

Why does the calculator show fees as part of the cost and also affect the balance?

Because many fees are effectively financed when they are charged to the account. If a fee is added to your balance, you can end up paying interest on it. If your provider bills fees separately and you pay them directly, your true interest cost may be slightly lower than this model.

How can I make the estimate more accurate?

Use the best available APR (or an average expected APR if variable), set draws to match your typical pattern, and set the payment to what you realistically pay each month. If your payment changes over time, run a couple of scenarios (lower payment vs higher payment) and compare totals. For statement-level accuracy, use daily balances from your real transactions, but for planning decisions this calculator is usually close enough.