Line of Credit Payment Calculator (Canada)

How this calculator works

A line of credit is revolving credit: the limit is reusable and interest is charged on the outstanding balance, usually calculated on the daily balance and billed monthly. This tool approximates that with a monthly interest charge, which is close enough for planning.

The critical feature of revolving credit is that a minimum payment set at the interest charge means the balance never falls. That is why lines of credit can sit unpaid for years while costing a steady monthly amount. Fixing a payment above the interest charge is what actually retires the debt — and the difference between a payment slightly above and comfortably above the interest charge is dramatic over time.

Assumptions and limits

This is an educational estimate produced entirely in your browser. It is not an offer of credit, an approval, or financial advice, and it does not use your real credit file. Lenders apply their own policy, pricing, and verification.

Frequently asked questions

How is line of credit interest calculated?

Usually on the daily balance, then charged to the account monthly. Because the balance changes with your spending and repayments, the interest charge varies month to month.

Why is my balance not going down?

If your payment is at or near the monthly interest charge, almost nothing goes to principal. The payment has to exceed the interest charge before the balance falls.

What rate do lines of credit use?

Unsecured lines of credit are commonly priced at the lender's prime rate plus a margin that depends on your credit profile. Secured lines of credit, such as a HELOC, are typically priced lower because they are backed by an asset.

Is a line of credit cheaper than a credit card?

Usually yes — lines of credit are typically priced well below credit card rates. But the balance still has to be repaid, and revolving debt can persist far longer than a fixed-term loan.

Does paying off a line of credit help my credit score?

Reducing the balance lowers your credit utilization, which is one of the more heavily weighted factors in a credit score.

Sources

Financial Consumer Agency of Canada — Credit reports and credit scores — Government of Canada (FCAC)
Financial Consumer Agency of Canada — Loans — Government of Canada (FCAC)
Bank of Canada — Interest rates — Bank of Canada

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