How does the calculator figure a line of credit payoff?
The line is treated like any balance being paid down with a fixed payment. Each month, the calculator multiplies the remaining balance by the annual rate divided by 12, adds that interest, and subtracts your payment. It repeats month by month until the balance reaches zero, then reports how many months that took and the interest charged in total.
Current monthly interest is the very first of those interest charges. It is the most important number on the page, because a payment at or below it leaves the balance unchanged or growing. Anything you pay above it goes straight to principal, and since next month's interest is charged on a smaller balance, the share going to principal rises a little every month.
Real lines usually charge interest daily on the outstanding balance, and the rate is typically an index, such as the prime rate, plus a margin. The calculator holds the rate you enter fixed for the whole payoff, which keeps the comparison clean. If your rate moves, re-run the numbers with the new figure.
Monthly interest = Balance × (Rate ÷ 12) New balance = Balance + Monthly interest − Payment Total interest = Total of payments − Starting balance
- Balance
- amount currently drawn and owed on the line
- Rate
- annual interest rate on the line, as a decimal
- Payment
- the fixed amount you pay each month
Example: clearing $18,000 on a 9.75% credit line
Scenario: Suppose you drew $18,000 on a home equity line for a roof replacement. The rate is 9.75%, you decide to pay $350 a month, and you make no further draws.
- Monthly rate9.75% ÷ 12 = 0.8125%
- First month's interest$18,000 × 0.008125 = $146.25; this is also the interest-only payment
- First month's principal$350 − $146.25 = $203.75 comes off the balance
- After one year12 payments of $350 bring the balance down to $15,442.73
- PayoffThe balance reaches zero after 67 payments (5 years 7 months); the last payment is $301.09
- Total interestTotal of payments $23,401.09 − $18,000 = $5,401.09
Paying $350 a month clears the $18,000 line in 5 years 7 months with $5,401.09 of interest.
If the variable rate rose by two percentage points to 11.75% for the whole payoff, the same $350 payment would take 72 months and cost $7,155.16 in interest.
When is a line of credit payoff estimate helpful?
Your draw period is ending
Many home equity lines switch from an interest-only draw period to a repayment period with a higher required payment. Running the payoff now shows what a self-imposed fixed payment would accomplish before that switch arrives.
You have been paying interest only
If your minimum covers just the interest, your balance has not moved. Entering a payment above the interest charge shows how quickly real progress could begin.
Choosing a payment for a one-time project
After drawing for a repair, tuition bill or business purchase, pick a payment that clears the balance on a timeline you are comfortable with. The calculator makes the trade-off between payment size and total interest easy to see.
Checking the effect of a rate change
When your rate is reset, enter the new figure. You can see how much longer the payoff will take, or how much you would need to add to stay on schedule.
What mistakes stretch out a line of credit payoff?
Treating the interest-only minimum as progress
An interest-only payment keeps the account current but leaves the full balance in place. Years of on-time payments can go by with nothing actually repaid.
Drawing again while paying down
A line stays open, so it is easy to dip back in. Each new draw adds to the balance and pushes the payoff date out, which is why the calculator assumes no new draws.
Assuming the rate will stay put
Most lines are variable. A higher rate means more of each payment goes to interest. Testing a rate one or two points higher shows how much cushion your payment has.
Forgetting about the repayment period terms
On a home equity line, the required payment can jump when the draw period ends. Check your agreement for when that happens and how the new payment is calculated.
Overlooking what secures the line
A home equity line is backed by your house. Falling behind can eventually put the home at risk, which is a different level of consequence from an unsecured personal line.
How much faster does a bigger payment clear a credit line?
Because interest is charged first, the payoff time is very sensitive to how far your payment sits above the monthly interest. At the low end, a modest increase changes the outcome dramatically; further up, each additional dollar still helps but with smaller gains.
The table keeps the $18,000 balance at 9.75% and varies only the payment. At $200, barely $54 above the interest charge, the line takes 13 years 7 months to clear. Adding $150 to that payment cuts the time by more than half and saves $9,074.23 in interest.
| Monthly payment | Time to pay off | Total interest | Total of payments |
|---|---|---|---|
| $200 | 163 months (13 years 7 months) | $14,475.32 | $32,475.32 |
| $250 | 109 months (9 years 1 month) | $9,170.83 | $27,170.83 |
| $350 | 67 months (5 years 7 months) | $5,401.09 | $23,401.09 |
| $500 | 43 months (3 years 7 months) | $3,380.16 | $21,380.16 |
| $750 | 27 months (2 years 3 months) | $2,104.43 | $20,104.43 |
How is a line of credit different from a regular loan when paying it off?
An installment loan comes with a set payment and a fixed end date: if you pay as scheduled, it is gone on time. A line of credit is revolving. You can borrow, repay and borrow again up to the limit, and the required payment is often just interest or a small percentage. There is no built-in finish line unless you create one.
That flexibility is useful while you are borrowing and a weakness while you are repaying. Picking a fixed payment and holding it, as this calculator does, gives the line the structure of a loan. If you want to see how a lender would set the required payment on a line, the line of credit payment calculator covers that side.
Terms used on this page
- Line of Credit
- A line of credit is a flexible borrowing account that lets you draw money up to a set limit, repay it, and borrow again. You pay interest only on the amount you have drawn, not on the full limit. Personal, business and home equity lines are common, and most carry variable interest rates.
- Interest Rate
- An interest rate is the price of money, stated as a percentage of the balance per year. Borrowers pay it to lenders, and savers earn it from banks. The rate alone does not include fees or compounding, so it can understate the true yearly cost of a loan or overstate a simple comparison of savings accounts.
- Minimum Payment
- The minimum payment is the smallest amount a credit card issuer or lender requires each billing cycle to keep the account in good standing. On cards it is often a small percentage of the balance plus interest, so paying only the minimum keeps you current but can stretch repayment over many years and multiply interest.
- Credit Utilization
- Credit utilization is the share of your available revolving credit that you are currently using, shown as a percentage. It is calculated by dividing your card balances by your credit limits, both per card and across all cards. Lower utilization generally helps credit scores, and it is one of the factors you can change quickly.
- Principal
- Principal is the amount of money you borrow, or the amount you deposit, before any interest. On a loan, it is the balance that interest is charged against, and each payment's non-interest portion reduces it. On savings, principal is your own money, the base on which interest is earned.
Line of Credit Payoff Calculator: common questions
How is interest calculated on a line of credit?
On the amount you have drawn, not the full limit. Lenders usually apply a daily rate to the outstanding balance and bill the total monthly, so the cost is roughly balance times the annual rate divided by 12. A $10,000 limit with $4,000 drawn accrues interest only on the $4,000.
What happens if I only pay the interest on my line of credit?
The balance stays the same. An interest-only payment covers that month's charge and nothing more, so you could pay for years and still owe the original amount. In the example, $146.25 a month on $18,000 at 9.75% keeps the balance flat; every dollar above that reduces it. Interest-only payments can also rise if the rate goes up, without reducing the balance at all.
Is it a good idea to pay off a HELOC early?
Paying early saves interest and removes a debt secured by your home, and home equity lines typically do not charge a penalty for paying down the balance. Some do charge a fee for closing the line within the first few years, so check your agreement. Weigh early payoff against keeping enough emergency savings.
Does paying down a line of credit help my credit score?
A revolving line's balance usually counts toward credit utilization, so paying it down can help. Home equity lines are sometimes treated differently from credit cards by scoring models. Either way, a lower balance and on-time payments are favorable factors over time. Closing a paid-off line removes its limit from your available credit, which can raise utilization on other accounts.
What happens when a HELOC draw period ends?
You generally can no longer borrow, and the line moves into a repayment period in which principal and interest must be paid over a set number of years. The required payment can rise sharply if you were paying interest only. Your agreement explains how the repayment-period payment is calculated. Planning a payment above interest-only well before that date can soften the jump when it comes.
Can I use this calculator for a business line of credit?
Yes. The math is the same for any revolving line: interest on the drawn balance and a fixed payment applied after interest. Business lines may have annual fees, draw fees or a requirement to bring the balance to zero for a period each year, which this estimate does not include.
Why does the payoff take longer when rates rise even though my payment is the same?
More of each payment goes to interest, so less goes to the balance. In this page's example, a two-point rate increase stretches the payoff from 67 to 72 months on the same $350 payment. Raising the payment when the rate rises keeps the original timeline. Because most lines have variable rates, it is worth checking how much cushion your payment has above the monthly interest.
Is interest on a home equity line of credit tax deductible?
Sometimes. Under current IRS rules, home equity interest can be deductible when the money is used to buy, build or substantially improve the home that secures the line, subject to limits, and only if you itemize. Interest on money used for other purposes generally is not. IRS Publication 936 covers the details.
Should I pay off my line of credit or my credit card first?
If you are deciding purely on cost, the higher-rate balance usually goes first, and that is often the card. Security matters too: a home equity line is tied to your house, so some people prioritize it for peace of mind. The debt avalanche calculator can compare the two with your real rates.
Sources
- Publication 936, Home Mortgage Interest Deduction — Internal Revenue Service. Accessed October 17, 2026.
- Regulation Z (Truth in Lending), 12 CFR Part 1026 — Consumer Financial Protection Bureau. Accessed October 17, 2026.
- Selected Interest Rates – H.15 release — Federal Reserve Board. Accessed October 17, 2026.
- Credit reports and scores — Consumer Financial Protection Bureau. Accessed October 17, 2026.
We cite primary sources: regulators, central-bank data and federal agencies. Worked examples on this page are our own calculations, last checked October 17, 2026. See our methodology.