Line of Credit Payment Calculator
This calculator shows what a line of credit costs when every payment goes only to interest, next to what happens when part of each payment reduces the balance. Enter the amount you have drawn, the annual rate on the line, and the monthly payment you actually make.
$118.12 a month if you pay interest only
A line of credit is usually revolving: the limit stays available as you repay, and the minimum payment is often interest only, which means the balance can sit unchanged for years.
How the two numbers are worked out
The calculator runs two separate month-by-month projections on the same starting balance and the same annual rate. In the first, your payment each month is exactly the interest that accrued since the last payment, so the balance never moves: monthly interest equals the balance drawn multiplied by the annual rate, divided by twelve. In the second, your payment is applied to that month's interest first, and whatever is left over reduces the balance, so next month's interest is charged on a smaller number. That is the whole of the difference, and it compounds quietly in your favour.
The arithmetic treats the annual rate as a nominal monthly rate — the annual figure divided by twelve — and applies it to the balance outstanding at the start of each month. It assumes the rate never changes, that you make every payment on time and in full, and that you neither draw more nor pay extra along the way. Under the Criminal Code, the criminal rate of interest in Canada is 35% per year (Criminal Code, s. 347), which is the outer legal boundary for the cost of credit rather than a typical price.
What each input means
- Balance drawn — what you actually owe on the line today, not the limit. A line of credit charges interest only on the portion you have used.
- Annual interest rate (%) — the rate stated on your agreement or your most recent statement, before any annual or transaction fees are considered. Lines of credit are commonly variable and priced off a lender's own prime rate, so this figure can move.
- Monthly payment you make — the dollar amount you send each month. If it is smaller than the monthly interest charge, the balance grows instead of falling, and the projection will show a balance that never clears.
What the result does and does not tell you
The output is a comparison of paths, not a quote. It tells you roughly how many months each approach takes to reach a zero balance, how much total interest each one costs, and how much of that total is avoided when part of every payment goes to principal. It does not tell you what a lender will charge you, whether you will be approved for anything, or whether your rate will stay where it is. The FCAC's guidance on debt and borrowing covers how revolving credit and minimum payments interact, and notes that the total cost of credit depends on the product, the lender and your own circumstances (FCAC — debt and borrowing).
Assumptions the arithmetic rests on
The projection assumes a fixed rate for the whole term, monthly interest calculations rather than daily accrual, no annual fee, no transaction or cash-advance fee, no optional insurance added to the balance, no missed or late payments, and no further draws. It also assumes interest is charged on the balance at the start of each month rather than on an average daily balance. A real statement can differ on any of those points, and where it does, the totals will differ too. Where a rate or a fee is not known to you, the honest answer is that the rate or the fee decides the outcome — the calculator cannot supply it.
loanmoose.ca is not a lender. It does not make loans, set rates, or make credit decisions, and nothing on this page is an offer or an approval. Lending in Canada is licensed provincially, so the regulator and the rules differ by province and territory (FCAC — provincial and territorial regulators).
Frequently asked questions
Does this calculator tell me what my payment will be?
No. The page takes the monthly payment as something you supply, because the minimum required payment on a line of credit is set out in your own agreement and varies by lender and by product. What the calculator does is show what a given payment achieves over time — how long the balance lasts and what the interest costs.
Why does an interest-only payment never reduce my balance?
Interest-only means every dollar you send covers the interest that accrued that month, so nothing is left to reduce the principal. The balance stays where it is, and the monthly interest charge stays the same with it. If your payment is smaller than the interest charge, the shortfall is often added to the balance under the agreement, and the balance grows.
My line of credit has a variable rate. What should I enter?
Enter the rate showing on your most recent statement. Lines of credit are commonly priced off a lender's own prime rate, which tends to move when the Bank of Canada's policy rate moves, so any projection is a snapshot rather than a forecast. Re-running the numbers at a higher rate shows how much the total interest changes.
Which costs does the projection leave out?
The projection covers interest and principal only. It does not include annual fees, transaction or cash-advance fees, optional insurance, or the effect of a missed or late payment. Those vary by lender and product, and where a fee applies it changes the totals, so treat the result as a model of the interest arithmetic rather than a full statement forecast.
Is loanmoose.ca a lender?
No. loanmoose.ca is a loan matching and comparison service. It does not lend, set rates, or make credit decisions, and no result on this page is an offer or an approval. Any rate, limit or term comes from a lender and is decided under that lender's own criteria and the rules that apply in your province or territory.
What if the payment is becoming hard to manage?
The FCAC publishes guidance on debt and borrowing, and provincial regulators supervise most lenders that are not federally regulated, so the right first contact depends on who your lender is. Only a licensed insolvency trustee can administer a consumer proposal or a bankruptcy. Which route suits you depends entirely on your own circumstances.
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