Estimate borrowing cost on a revolving credit balance
A line of credit calculator estimates interest and payment effects based on the amount drawn, annual rate, time outstanding, and entered fees. Unlike a term loan, interest generally relates to the balance actually used.
Formula
Worked example
If $25,000 is drawn at a 12% annual rate for 45 days using a 365-day basis, estimated simple interest is about $369.86 before origination, draw, maintenance, or other charges.
Available limit and outstanding balance are different
The credit limit is the maximum available facility. The outstanding balance is the amount currently borrowed and is usually the basis for interest calculations.
Model each expected draw and repayment when the balance changes during the month. An average daily balance method can differ from a simple single-balance estimate.
Include fees and variable-rate risk
A facility may include origination, annual, maintenance, draw, nonuse, or late fees. The rate may also move with a benchmark.
Compare offers using the expected borrowing pattern, not only the headline rate. A low rate with high recurring fees may be expensive for a business that rarely draws funds.
Line-of-credit comparison checklist
- Expected drawn balance and duration.
- Fixed or variable interest rate and day-count method.
- Origination, annual, draw, nonuse, and maintenance fees.
- Minimum payment, collateral, renewal, and covenant terms.
Last reviewed September 8, 2026. This calculator provides an estimate for planning and education. Verify current rates, rules, and account-specific terms with the relevant official source.