Line of Credit Calculator
Balance, rate & repayment
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Fill in the fields on the left and this updates as you type.
Know what this estimate is based on
- Jurisdiction
- United States card and lending practice
- Scope and limitations
- Educational estimate only. Your issuer sets the minimum-payment formula, how a payment is allocated across balances, when interest is charged, and any fees or promotional terms — check your cardholder agreement for the figures that bind.
- Source links checked
- Jul 30, 2026
Built and regression-tested by Smart Tools Lab. It has not been individually reviewed by a licensed financial, tax, or legal professional.
How to use
- 01
Enter your outstanding balance and rate.
- 02
Set the repayment term after the draw period.
- 03
Compare the interest-only and repayment payments.
Formula
Two payments are compared for the same outstanding balance. Monthly periodic rate: i = (APR / 100) / 12 Repayment months: n = repayYears x 12 1) Interest-only payment (draw period) = balance x (APR / 100) / 12 This equals balance x i. It covers only interest, so it never reduces the balance. 2) Repayment payment (amortizing) = balance x i / (1 - (1 + i)^-n) This is the standard amortization payment that retires the whole balance over n months. (If i = 0, it is simply balance / n.) 3) Payment increase (the shock) = repayment payment - interest-only payment 4) Interest in repayment = repayment payment x n - balance Total paid across the repayment phase minus the principal returned. This is interest during the repayment phase only; it excludes any interest paid during the draw period, so it is not the lifetime cost of the line.
Example
Defaults: outstanding balance = $25,000, APR = 11%, repayment term = 5 years. Step 1 - Monthly rate: i = (11 / 100) / 12 = 0.0091667 Step 2 - Interest-only payment (draw period): $25,000 x 0.0091667 = $229.17 per month. Every dollar of this is interest; the balance stays at $25,000 however long the draw period runs. Step 3 - Repayment months: n = 5 x 12 = 60 Step 4 - Repayment payment (amortizing the balance over 60 months): $25,000 x 0.0091667 / (1 - (1.0091667)^-60) = $229.17 / 0.421558 = $543.56 per month. Step 5 - Payment increase (the shock): $543.56 - $229.17 = $314.39 per month. The payment more than doubles, rising to about 2.37x its draw-period size, in a single billing cycle - and on a HELOC that cycle arrives on a date fixed at closing, not when your budget is ready for it. Step 6 - Interest in repayment: $543.56 x 60 - $25,000 = $32,613.63 - $25,000 = $7,613.63. This is interest during the 5-year repayment phase only. It does not include a dollar of what you paid during the draw period, all of which was interest and none of which touched the balance.
Definitions
- Line of credit
- A revolving form of borrowing where a lender sets a maximum limit and you draw funds as needed, repay, and can draw again, rather than receiving a single lump sum.
- Draw period
- The opening phase of a line of credit during which you can borrow up to the limit and are often required to pay only the interest that accrues, leaving the principal untouched.
- Interest-only payment
- A payment equal to balance x rate / 12 that covers only the interest charge and does not reduce the balance, which is why it is small relative to a fully amortizing payment.
- Repayment period
- The phase after the draw ends, when borrowing stops and each payment must amortize the outstanding balance to zero over the repayment term.
- Amortization
- Spreading a balance into equal periodic payments sized so that interest and principal together clear the debt exactly at the end of the term.
- Payment shock
- The abrupt rise in the required payment when interest-only billing ends and full amortization begins, measured here as the repayment payment minus the interest-only payment.
Good to know
A revolving line of credit is not a term loan
A line of credit is revolving debt: a lender approves a maximum limit, and you draw against it as needed rather than receiving a single lump sum. As you repay what you have drawn, that capacity becomes available to borrow again, much like a reusable pool of funds. A term loan works the other way. It hands you the full principal on day one, fixes a schedule of equal payments, and shrinks toward zero with no option to redraw. That structural difference shapes everything about the cost. With a term loan you know the payment and the end date the moment you sign. With a line of credit the balance moves with your behavior, so the payment is recalculated from whatever you happen to owe. The calculator captures the line by working from a single outstanding balance you specify, because that snapshot is what drives both the interest-only figure and the eventual repayment figure. Understanding the revolving nature matters because it explains why a line can feel cheap and flexible early on, then become demanding later. Flexibility during the borrowing phase is the feature people pay for, but it is also what hides the true cost. A term borrower confronts the full payment immediately; a line borrower can defer that reckoning, which is convenient but can mask how large the eventual obligation will be once the structure changes and the principal finally has to be repaid in full.
The draw period: interest-only by design
Most lines of credit open with a draw period, a stretch of time during which you can pull funds up to the limit and, in many cases, are only required to pay the interest that accrues. Paying interest only keeps the early payment small because none of it reduces what you owe. The principal simply sits, charging interest month after month, while your payment covers that charge and nothing more. The calculator models this directly: the interest-only payment is the outstanding balance multiplied by the rate, divided by twelve to convert an annual rate into a monthly charge. On the default 500,000 balance at an 11 percent rate, that is 4,583 a month, and every cent of it is interest. The appeal is obvious. A low required payment frees up cash flow and lets you borrow for a project, a gap in income, or a working-capital need without immediately committing to a heavy repayment. The risk is equally clear but easy to ignore. Because nothing is being repaid, the balance at the end of the draw period is exactly what it was at the start, unless you voluntarily paid down principal along the way. Many lines permit but do not require principal payments during the draw, so a disciplined borrower can chip away at the balance, while a borrower who pays only the required minimum arrives at the end of the draw owing the full amount and facing a very different payment than the one they grew used to.
The repayment period: now the principal must amortize
When the draw period ends, the line converts to a repayment period, and the character of the payment changes completely. You can no longer borrow more, and each payment must now retire principal as well as cover interest, so the lender amortizes the outstanding balance over the repayment term. Amortization spreads the balance into equal payments sized so the debt reaches zero exactly at the end of the term. The calculator computes this with the standard amortization formula, using the same rate but now solving for a payment that clears the whole balance across the repayment months. On the default inputs, the 500,000 balance amortized over a five-year repayment term produces a payment of about 10,871 a month. That figure includes both the interest still accruing on the shrinking balance and the principal being steadily retired. Early repayment payments are weighted toward interest because the balance is still large; later ones tilt toward principal as the balance falls. The crucial point is that the comfortable interest-only phase was always temporary. The repayment period is where the borrowed money actually gets paid back, and the payment is set by three things you either control or know in advance: the balance carried into repayment, the rate, and how many years the lender gives you to clear it. A shorter repayment term means a larger payment but less total interest; a longer one eases the payment but costs more across the life of the debt.
Payment shock: why the jump is so large
The defining hazard of a line of credit is payment shock, the abrupt increase that hits when interest-only billing ends and full amortization begins. The calculator quantifies it as the payment increase: the repayment payment minus the interest-only payment. On the defaults that is 10,871 minus 4,583, a jump of about 6,288 a month. In percentage terms the payment more than doubles, rising to roughly two and a third times its former size, and it does so on a single billing cycle rather than gradually over many months. This is not a penalty or a fee; it is simply arithmetic. During the draw you paid only interest, so the payment reflected the cost of carrying the balance. In repayment you must also return the principal, and compressing 500,000 of principal into five years adds a large monthly slice on top of the interest you were already paying. The shorter the repayment term, the more concentrated that principal slice becomes and the steeper the shock. Borrowers are caught out when they budget around the small draw-period payment and treat it as the real cost of the line. A reliable way to soften the shock is to make voluntary principal payments during the draw, so the balance that has to amortize is smaller when repayment begins. Another is to confirm the repayment term in advance and rehearse the higher payment in your budget long before it actually arrives, so the transition is a planned step rather than a sudden strain.
Variable rates can raise the payment before repayment even starts
Lines of credit are very often variable-rate products, meaning the rate is tied to a benchmark and resets as that benchmark moves. This adds a second source of payment increases that is entirely separate from the draw-to-repayment shift. Because the interest-only payment is the balance multiplied by the rate divided by twelve, a higher rate lifts that payment immediately, even while you are still in the draw period and paying interest only. Suppose the rate on the default 500,000 balance climbed from 11 percent to 13 percent. The interest-only payment would rise from 4,583 to about 5,417 a month, an increase of more than 800, with no change in what you owe and no shift into repayment. The calculator uses one fixed rate to give a clean comparison, so this rate-driven increase is best understood as a separate hypothetical layered on top of the structural jump the tool already shows. The combined effect is what makes a line riskier than a fixed-rate term loan. A term borrower at a fixed rate faces one known payment for the life of the debt. A line borrower can face a rising payment during the draw if rates climb, and then a second, larger increase when repayment begins, possibly at a rate that is itself higher than when the line was opened. Anyone relying on a line should stress-test the payment against a meaningfully higher rate, not just the rate quoted today, because the variable feature can move against them with little warning.
Reading the four outputs together
The calculator returns four numbers, and each answers a different question about the same line of credit. The interest-only payment is what you owe each month during the draw period if you pay only interest; on the defaults it is 4,583, and it represents the easy phase. The repayment payment is what you will owe each month once amortization begins; at about 10,871 it is the demanding phase. The payment increase, around 6,288, is the gap between those two, and it is the single most important figure for budgeting because it is the shock you must absorb. The interest in repayment, about 152,272, is the interest you will pay during the repayment phase alone as the balance amortizes to zero, and it is not the lifetime interest on the line because it excludes everything paid during the draw. Read in sequence, these outputs tell a story: a low payment now, a much higher payment later, the size of the leap between them, and the interest cost of the second phase. The right way to use them is to plan backward from the repayment payment rather than forward from the interest-only payment. If the repayment payment fits your budget, the line is sustainable; if it does not, the comfortable draw-period payment is a warning sign rather than a green light. Comparing the four figures against your income and your other obligations turns an abstract credit limit into a concrete schedule you can actually test before you commit to drawing the money.
How the repayment term reshapes the payment and the interest
The repayment term, the number of years you are given to clear the balance once the draw period ends, is the lever with the largest effect on the repayment payment. Because amortization spreads a fixed balance across that term, a shorter term concentrates the principal into fewer payments and a longer term dilutes it across more. On the default 500,000 balance at 11 percent, a five-year repayment produces a payment near 10,871. Cut the term to three years and the payment climbs to roughly 16,369, because the same principal must be returned in far fewer installments. Stretch it to ten years and the payment falls to about 6,888, since each payment carries a smaller slice of principal. The trade-off is total interest. A longer term keeps the balance outstanding for more months, so more interest accrues even though each payment is smaller. A shorter term costs more per month but less overall because the principal is retired quickly and stops generating interest sooner. There is no universally correct choice; it depends on whether your binding constraint is monthly cash flow or lifetime cost. What the calculator makes visible is the size of that trade-off for your specific balance and rate, so the decision is informed rather than guessed. When you can choose or negotiate the repayment term, model several lengths and weigh the payment you can comfortably sustain against the interest you are willing to pay for that comfort, rather than defaulting to the longest term simply because it lowers the monthly figure.
Paying down principal during the draw period
Although the draw period requires only interest, most lines allow you to pay more, and doing so is the most direct way to defuse the payment shock waiting at the end. Every unit of principal you repay during the draw is a unit that no longer has to amortize in the repayment period, which lowers the repayment payment and reduces the interest charged in that later phase. Consider the defaults. Carrying the full 500,000 into a five-year repayment yields a payment of about 10,871. If voluntary payments during the draw had reduced the balance before repayment began, the amortized payment would start from that smaller figure and the jump would be proportionally gentler. Principal payments during the draw also lower the interest-only payment going forward, because that payment is computed from the current balance; reduce the balance and next month's interest charge falls. This creates a compounding benefit: paying down principal early cuts both the immediate interest cost and the eventual repayment burden. The discipline required is real, because the line is designed to feel inexpensive precisely when it asks the least of you. Treating the draw period as a chance to get ahead, rather than as a long stretch of minimum payments, is what separates a line that stays manageable from one that becomes a shock. The calculator helps by showing what the repayment payment would be at any balance you enter, so you can see how much a given level of early repayment would soften the eventual transition into full amortization.
When a line of credit fits and when it does not
A line of credit suits situations where the amount and timing of borrowing are uncertain and flexibility has genuine value. Funding a renovation that bills in stages, bridging an irregular income, or covering working capital that ebbs and flows all benefit from drawing only what you need and paying interest on only that. Because interest accrues on the drawn balance rather than the whole limit, an unused line costs little to keep open. The structure works against you when the need is for a known, fixed sum that will be repaid on a predictable schedule, because then the line's flexibility is wasted and its variable rate and looming payment shock add risk a fixed-rate term loan would not. A line can also encourage a slow drift upward in balance, since drawing more is easy and the required payment stays low, which is how borrowers reach the end of a draw period owing far more than they intended. The honest test is whether the repayment payment fits your budget at a rate somewhat higher than today's. If it does, the line's flexibility is a benefit you can afford. If it does not, the low draw-period payment is luring you into a commitment you cannot sustain. Using the calculator to look past the interest-only figure and confront the repayment payment, the payment increase, and the interest that will accrue in repayment is the most useful thing you can do before deciding to draw against a line at all.
Stress-testing a line before you draw
The safest way to use a line of credit is to run the numbers for the worst plausible case before you borrow, not after. Three variables move the outcome, and each deserves a deliberate test. First, the balance you expect to carry into repayment: enter the highest amount you might realistically owe at the end of the draw, since that is what will amortize, rather than a hopeful lower figure. Second, the rate: because lines are usually variable, repeat the calculation at a rate two or three points above today's quote to see how a tightening rate environment would lift both the interest-only payment now and the repayment payment later. Third, the repayment term: confirm how many years the lender actually grants once the draw ends, because a shorter term than you assumed can sharply raise the payment. Running these three together produces a realistic ceiling on the payment you might face, and comparing that ceiling to your income and existing obligations tells you whether the line is prudent. The point of the exercise is to make the payment shock a planned event rather than a surprise. A borrower who has already seen the repayment payment at a higher rate and a fuller balance can budget for it, accelerate principal during the draw, or choose a smaller draw. A borrower who looks only at the comfortable interest-only payment is planning around the one number that understates the true commitment, which is exactly how lines of credit catch people out.
Frequently asked questions
Why does the payment more than double when repayment starts?
During the draw period you pay only interest, so the payment reflects the cost of carrying the balance. In repayment each payment must also return principal, and compressing the full balance into the repayment term adds a large monthly slice on top of the interest. On the defaults the payment rises from 4,583 to about 10,871, a jump of roughly 6,288.
How is the interest-only payment calculated?
It is the outstanding balance multiplied by the annual rate and divided by twelve. On a 500,000 balance at 11 percent that is 500,000 x 0.11 / 12 = 4,583 a month. Because none of it reduces the balance, the amount owed at the end of the draw period is the same as at the start unless you voluntarily pay down principal.
Is the interest in repayment the total cost of the line?
No. The interest in repayment, about 152,272 on the defaults, is the interest charged during the repayment phase only as the balance amortizes to zero. It does not include any interest you paid during the draw period, so the lifetime interest on the line is higher than this figure.
Can the payment rise even before repayment begins?
Yes. Lines of credit are usually variable-rate, so if the benchmark rate increases, the interest-only payment rises immediately because it is computed from the current rate. For example, a move from 11 to 13 percent would lift the interest-only payment on a 500,000 balance from 4,583 to about 5,417, with no change in what you owe.
How can I reduce the payment shock?
Pay down principal voluntarily during the draw period so a smaller balance has to amortize later, confirm the repayment term in advance, and stress-test the repayment payment at a rate above today's quote. Entering a smaller balance in the calculator shows how much early repayment would soften the transition.
Does a longer repayment term make the line cheaper?
It lowers the monthly payment but raises total interest. Spreading the balance over more months means each payment carries less principal, so the payment falls, but the balance stays outstanding longer and accrues more interest overall. A shorter term costs more per month and less in total.