Line of credit calculator
A line of credit is revolving, so the balance only falls if you pay more than the interest.
Time to clear the balance
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How this calculator works
- Convert the annual rate to a monthly rate.
- Add the monthly interest to the balance, then subtract your payment.
- Repeat until the balance reaches zero and count the months.
- If the payment does not cover the interest, the balance grows and the calculator tells you.
Formula: Each period: balance = balance × (1 + rate) − payment
Frequently asked questions
Why is my line of credit balance not going down?
If your payment is less than the interest charged each month, the balance rises. The calculator warns you when this happens. You need a higher payment or a lower rate to make progress.
Are line of credit rates fixed?
Most lines of credit have variable rates tied to the lender's prime rate, so the rate and the interest cost can change when prime changes.
Should I pay off a line of credit or invest?
That depends on the rate you are paying versus the after-tax return you expect. Clearing a high-rate balance is a guaranteed saving. This is general information, not financial advice.
Sources
- Financial Consumer Agency of Canada — Financial Consumer Agency of Canada
- Criminal Code, s. 347 — Criminal interest rate — Government of Canada — Justice Laws
Important legal information
Promissory.ca is not a lender, bank, mortgage broker or credit counsellor. We do not make lending decisions and we do not charge you a fee to use this service.
Submitting an application does not guarantee approval. All applications, rates and terms are set and approved solely by the individual lender or licensed professional.
Rates, fees and loan amounts vary by lender, province, loan type and your credit profile. Advertised rates are the lender's lowest offered rate and may not be available to you.
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If you are struggling with debt, consider contacting a non-profit credit counselling service or a Licensed Insolvency Trustee before borrowing more.
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