Calculate Line of Credit Interest Payment (Online Calculator)

Line of Credit Interest Payment Calculator

Outstanding Balance ($):

Annual Interest Rate (%):

Number of Days in Billing Cycle:

Calculating the interest payment on a line of credit (LOC) involves a few straightforward steps. The interest on a line of credit is typically calculated daily based on the outstanding balance, and payments can vary each month depending on how much of the line of credit is used.

Steps to Calculate Line of Credit Interest Payment

1. Determine the Outstanding Balance: This is the amount of money you have borrowed and not yet repaid.

2. Identify the Interest Rate: The annual interest rate provided by the lender.

3. Calculate the Daily Interest Rate: Divide the annual interest rate by 365 (the number of days in a year).

4. Calculate the Daily Interest: Multiply the daily interest rate by the outstanding balance.

5. Calculate the Interest Payment for the Month: Multiply the daily interest by the number of days in the billing cycle.

Formula

1. Daily Interest Rate:

   $$\text{Daily Interest Rate} = \frac{\text{Annual Interest Rate}}{365}$$

2. Daily Interest:

   $$\text{Daily Interest} = \text{Outstanding Balance} \times \text{Daily Interest Rate}$$

3. Monthly Interest Payment:

   $$\text{Monthly Interest Payment} = \text{Daily Interest} \times \text{Number of Days in Billing Cycle}$$

Example Calculation

• Outstanding Balance: $5,000
• Annual Interest Rate: 12% (or 0.12)
• Number of Days in Billing Cycle: 30

1. Daily Interest Rate:

   $$\text{Daily Interest Rate} = \frac{0.12}{365} \approx 0.0003288$$

2. Daily Interest:

   $$\text{Daily Interest} = 5000 \times 0.0003288 \approx 1.644$$

3. Monthly Interest Payment:

   $$\text{Monthly Interest Payment} = 1.644 \times 30 \approx 49.32$$

So, the monthly interest payment would be approximately $49.32.