Interest Accrues on Every Dollar You Owe

A line of credit works like a revolving loan: you borrow up to a limit, and interest accrues each month on whatever balance is outstanding. The monthly interest charge is simply the balance times the monthly rate — at 12% APR, a $15,000 balance costs $150 a month, or $1,800 a year, before any principal is repaid. The only lever that shrinks the balance is paying more than the interest: a fixed payment of $500 a month retires that debt in a few years, while paying the interest-only minimum keeps it alive indefinitely. This calculator shows the monthly and annual interest cost, then projects payoff under the payment method you choose.