# Minimum payment on Line of Credit



## Taxsaver

To make my budget as precise as possible, I need to know how to calculate the minimum monthly payment on my Line of Credit. I asked two people of the bank, but no one knows how to calculate it...

Let's say I owe $10,000 right now and my interest rate is 5%. What will be the payment taken out of my bank account on July 12? Thanks.


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## CanadianCapitalist

AFAIK, it would simply be 

($10,000 * 0.05 / 365) * 30

The simple interest on a $10,000 loan for the month.


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## Taxsaver

Thanks for helping me with the interest, but how much do I calculate the monthly minimum payment?


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## CanadianCapitalist

Taxsaver said:


> How much do I calculate the monthly minimum payment?


I don't know what you mean. For the Secured lines of credit that I have, the minimum payment is the interest on the loan. AFAIK, that's how lines of credit work.


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## FrugalTrader

Unsecured lines of credit work a little different than a secured line of credit (like a HELOC). A HELOC requires interest only, but an unsecured LOC will require a min of 3% of balance payment/month (with CIBC anyways).


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## Taxsaver

FrugalTrader said:


> Unsecured lines of credit work a little different than a secured line of credit (like a HELOC). A HELOC requires interest only, but an unsecured LOC will require a min of 3% of balance payment/month (with CIBC anyways).


Mine is an unsecured one, then. It is with CIBC. I will calculate if 3% is the correct percentage. What does "unsecure" mean? Thanks.


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## MoneyGal

Secured = secured against a physical asset, usually either the equity in your house ("home equity line of credit") or a CD or bond held at the issuing institution. 

Unsecured = no physical asset is pledged as guarantee.


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## Taxsaver

MoneyGal said:


> Secured = secured against a physical asset, usually either the equity in your house ("home equity line of credit") or a CD or bond held at the issuing institution.
> 
> Unsecured = no physical asset is pledged as guarantee.


No doubt about it, mine is unsecured.


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## urvi88

CanadianCapitalist said:


> AFAIK, it would simply be
> 
> ($10,000 * 0.05 / 365) * 30
> 
> The simple interest on a $10,000 loan for the month.


Thanks for the information, it solves the problem of calculating interest.


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