Line of Credit Cost Calculator
Estimate monthly interest and ongoing fees on a line of credit or overdraft facility based on the average balance drawn and the annual rate charged.
Your results
Calculation breakdown
- Monthly interest
- average balance × annual rate ÷ 12
- Total monthly cost
- monthly interest + service fee
Worked example
Drawing an average $8,000 on a line of credit at 11.5% p.a. with a $10 monthly fee costs about $77 in interest plus the fee, roughly $87 a month.
Assumptions
- Uses a simple average balance rather than daily balance compounding.
- Assumes the facility's rate and fee stay constant over the period.
- Actual providers may compound interest daily; treat this as an estimate.
How this calculator works
A line of credit charges interest only on the amount drawn, plus sometimes a service fee, rather than on a fixed principal like a term loan. This calculator applies the annual rate to your average outstanding balance to estimate monthly interest, and adds any flat service fee to give the total monthly cost.
Frequently asked questions
How is interest charged on a line of credit different from a term loan?
You only pay interest on the balance you have actually drawn down, so interest can vary month to month depending on how much of the facility you use, unlike a fixed-principal term loan.
What is a typical line of credit used for?
Common uses include managing cash flow gaps, small business working capital, or accessing home equity flexibly, though rates are often higher than a standard home loan.
Are there fees beyond interest?
Many facilities charge an annual or monthly service fee regardless of usage, plus possible drawdown fees, so include these for an accurate total cost.
Results are estimates only and are not financial, tax, legal or credit advice.