Line of Credit Calculator
Model every withdrawal and payment in a single statement cycle. See how each transaction and its timing affect your exact interest charge.
Average Daily Balance method · APR ÷ 365, applied per-segment · LOC limit enforced with over-limit warnings
Average Daily Balance
How your interest is calculated
Each withdrawal and payment changes your daily balance. Interest is charged on the average of every day's balance across the full cycle.
Transaction Timing Matters
Earlier payments save more
A payment made on Day 5 vs Day 25 can significantly reduce your average daily balance, and therefore, your interest charge.
Same-day transactions are applied in the order they were entered (top to bottom).
Frequently Asked Questions
How is interest calculated on a line of credit?
Interest on most lines of credit is calculated daily, based on the outstanding balance, and then summed across the billing cycle to determine the total interest charged. Because interest accrues daily, withdrawals increase interest immediately, while payments reduce interest starting from the day they are applied.
How does the Average Daily Balance method work with withdrawals?
Lines of credit usually calculate interest using the Average Daily Balance (ADB) method.
Each day, interest is calculated on the balance outstanding for that day. When you make a withdrawal, your balance increases and interest begins accruing on the higher balance from that day forward. When you make a payment, the balance decreases and interest charges drop accordingly.
This calculator tracks every balance change throughout the cycle and calculates interest for each period separately before summing the total interest for the statement period.
What does "Day 0" mean for transactions?
Day 0 represents the statement date, which is the first day of the billing cycle.
A transaction entered on Day 0 takes effect immediately and affects the balance for the entire cycle. Day 1 means one calendar day after the statement date, and so on until the end of the billing cycle.
Using day offsets makes it easier to model transactions within a typical 30–31 day credit cycle.
Why does paying earlier save so much interest?
Interest on a line of credit accrues every day based on the outstanding balance.
If you move a $1,000 payment 10 days earlier, you avoid paying interest on that amount for those 10 days. Each individual saving may seem small, but over time, especially with repeated borrowing, earlier payments can significantly reduce the total interest paid.
What does "same-day vs next-day" posting mean?
Posting rules determine when a payment begins reducing your balance for interest calculations.
- • Same-day posting means a payment reduces your balance on the day it is received, so interest stops accruing on that portion immediately.
- • Next-day posting means the balance is not reduced until the following day, so interest continues accruing through the payment day.
Most modern lines of credit use same-day posting, but policies can vary by lender.
What happens if a withdrawal exceeds my available credit?
If a withdrawal exceeds the credit limit you entered, the calculator will display an over-limit warning, but it will still allow the scenario to run. This makes it possible to model "what-if" situations. In practice, most lenders will decline transactions that exceed the available credit limit. Always check your line of credit agreement for the lender's specific policy.
Why do some lenders use 360 days instead of 365?
The 360-day convention is a historical banking standard more common in commercial loans and some HELOC products. Because the denominator is smaller, the daily interest rate is slightly higher. This results in a marginally higher effective interest cost compared with a 365-day calculation.
The method used for your line of credit will be specified in your loan agreement or credit disclosure statement.
Do I pay interest on unused credit in a line of credit?
No. Most lines of credit only charge interest on the amount you actually borrow. If your credit limit is $20,000 but you only withdraw $3,000, interest is calculated only on the $3,000 outstanding balance. However, some lenders may charge annual fees or maintenance fees, even if you are not using the credit line. Check your credit agreement for details.